Reference no: EM131491815

Break even analysis

Use formulas

A manufacturer of electronic products provides the following information related to income, costs and capacity of plant. The purpose is to find the answers to the questions that are of primary interest to the company. The data are the following.

The capacity of the plant (plant capacity) is 55,000 units. The variable cost per unit (variable cost) is $18. The benefit that obtains in each unit sold (contribution margin) is $22, Sale Price $40, fixed costs totals (total fixed cost ) are $550,000. The rate of tax (tax rate) 15%, the revenues expected (desired profit) is $85,000

1. What is the total income that must have the company to recover the Total Fixed Cost and the variable total cost?

2. What will be the profit that the company could obtain prior to the payment of taxs and after the payment of taxs, if the company used the total capacity of the plant.

3. The company is interested in knowing what the number of units that you must have to recover their total costs

4. What is the total income that the company must have to cover the fixed costs, variables, expected profit and payment of taxs?

5. What will be the total income that will allow the company to recover the total costs and obtain the aforementioned gain?

6. How many units must be sold to the enterprise to obtain the gain planned?

7. Demonstrate whether the totality of income that I got in question 4 is sufficient to recover the total fixed cost, variable total cost, the taxs expenses and the desired profit.

8. What percent of plant capacity will have to be used by the company, if this want to cover with their sales total costs, the payment of taxs and the expected profit?

9. What would be the selling price of the product so that the plant was in its break even point if the cost was $500.00, the variable cost out of $50, the maximum quantity to sell out $40,000.

10. Taking as break even point the price of question #9, if the company would like to obtain a profit of 30 per cent which would be the selling price of the product.