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What is the maximum profit per year

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Question 1 - Fu's firm has the capacity to produce a maximum of 6000 items per annum. The fixed costs are $385,500 per annum, variable costs are $5 per item, and he sells each item for $80.

Required -

a. Calculate the break-even volume, break-even revenue, and break-even as a percent of capacity per annum.

b. If he produced and sold 5100 items in a year, what was the profit made or loss incurred?

c. What is the maximum profit per year that he can expect from his firm?

Question 2 - Sandra's company has a machine that can produce a maximum of 50,000 components per annum. She sells each component for $3.50. The fixed costs are $36,000 per annum and variable costs are $0.35 per component.

Required -

a. Calculate the break-even volume, break-even revenue, and break-even as a percent of capacity per annum.

b. If she produced and sold 13,500 components in a year, what was the profit made or loss incurred?

c. What is the maximum profit per year that she can expect from her company?

Reference no: EM132461677

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