Reference no: EM131053501
Derby Phones is considering the introduction of new model of headphones with the following prices and cost characteristics
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Sales price
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$270 per unit
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Variable cost
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120 per unit
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Fixed cost
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300,000 per month
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Require
a) What number must Derby sell per month to break even
b) What number must Derby sell to make an operating profit of $180,000 for the month.
Exhibit 3.5
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Lo-Lev Company(1,000, 000 units
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Hi-Lev Company(1,000,000 units)
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Amount
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Percentage
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Amount
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Percentage
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Sales
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$1,000,000
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100
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1,000,000
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100
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Variable cost
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750,000
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75
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250,000
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25
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Contribution Margin
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250
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25
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750,000
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75
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Fixed Cost
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50,000
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5
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550,000
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55
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Operating profit
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200,000
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20
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200,000
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20
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Break-even Point
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200,000units
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733,334 units
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Contribution margin per init
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0.25
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0.75
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3.33
The Greenback Stores cost structure is dominated by variable cost with a contribution margin ratio of 2.5 and fixed cost of $40,000. Every dollar of sales contributes 25cents toward fixed costs and profit. The cost structure of competitor. One-Mart, s dominated by fixed cost with a higher contribution margin ratio of .75 and fixe cost of $440,000. Every dollar of sales contributes 75 cents toward fixed costs and profits. Both companies have sales of $800,000 for the month.
Required
a. Compare the two compares cost structures using the format in Exhibit 3.5
b. Supposes that both companies experience a 15 percent increase in sales volume. By how much would each company profits increase?
3.51
Odd Wallow Drinks is considering adding a new line of fruit juice to its merchandise products. This lines of juices has the following prices and cost
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Selling price per case
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$75
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Variable cost per case
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$36
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Fixed cost per year associated with this product
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$12,168,000
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Income tax rate
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40%
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Required
a. Compute Odd Wallow Drink break-even point in units per year
b. How many cases must Odd Wallow Drinks sell to earn $1,872,000 per year after taxes on the juice
3.57
Sundial, Inc. produces two models of sunglass: AU and AZ. The sunglass have the following charaterrstcs
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AU
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NZ
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Selling price per unit
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$160
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$160
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Variable cost per unit
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60
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80
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Expected units sold per yeesra
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60,000
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40,000
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The total fixed cost per years for the company are $2,208,000
Required
a) What is the anticipated level of profits for the expected sales volume
b) Assuming that the product mix is the same at the break-even point, compute the break-even point
c) If the products sales mix were to change to nine Programmer-style and for each Executives style bag, what will be the new break-even volume for On-the-Go
3-59
Minot Furniture sells two model of desk to retail customers-basics and adjustable(for these who want the option to stand at their desk) Basic desk sell for $600 each and adjustable desk sell for $900 each. The variable cost of a basics desk is $360 and that of an adjustable desk is $450. Annual fixed cost at Minot Furniture are $243,000. The break-even point at the current sales mix is 750 total units
Required
How many basic desk and how many adjustable desk are sold at the break-even? In other words, what is the assumed sales mix?
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What is nearly its maximum theoretical thermal efficiency
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Aboriginal folk stories are difficult to locate
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Considering the introduction of new model of headphones
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