Question 1

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. How many dolls must be sold each week to produce a net income of $2250?

Accepted Answer

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Question 2

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What number of meals must be sold to generate a net income of $7,800?

Accepted Answer

To find the break-even point or target profit point, we use the formula: (Fixed Costs + Target Profit) / (Selling Price per Unit - Variable Cost per Unit). Here, Fixed Costs = $12,000, Target Profit = $7,800, Selling Price per Unit = $18, and Variable Cost per Unit = $6. Plugging these into the formula gives: ($12,000 + $7,800) / ($18 - $6) = $19,800 / $12 = 1,650 meals.

Question 3

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the monthly net income at a volume of 1800 lamps per month?

Accepted Answer

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Question 4

A manufacturing company is studying the feasibility of producing a new product. The selling price is expected to be $80. The new production line would manufacture up to 9,000 units at a variable cost of $15 per unit. Fixed costs would be $150,000. Variable selling and administration expenses would amount to $5. Determine the break-even point as a percent of capacity.

Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit, where the contribution margin per unit is the selling price per unit minus the variable cost per unit (including variable production and selling costs). Here, the contribution margin per unit = $80 - $15 - $5 = $60. The break-even point in units = $150,000 / $60 = 2,500 units. To find the break-even point as a percent of capacity: (2,500 units / 9,000 units) * 100 = 27.78%.

Question 5

Sherry Tomason is considering the start-up of a delivery company service. She has compiled information on costs as follows:  With the cost data provided, determine the fixed costs per month.

Accepted Answer

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Question 6

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. How many dolls must be sold each week to produce a net income of $1125?

Accepted Answer

To find the break-even point in units, we use the formula: Break-even point in units = (Fixed Costs + Desired Profit) / (Selling Price per Unit - Variable Cost per Unit). Plugging in the given values: (9000 + 1125) / (30 - 7.5) = 10125 / 22.5 = 450 dolls.

Question 7

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. At what percent utilization would the monthly net income be $44,000?

Accepted Answer

The answer of Cando Manufacturing makes lamps that retail at...

Question 8

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the monthly net income if Cando operates at 60% capacity?

Accepted Answer

The answer of Cando Manufacturing makes lamps that retail at...

Question 9

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What number of meals must be sold to break-even?

Accepted Answer

The answer of Cliff runs a restaurant in a small...

Question 10

Shannon Vale is considering the start-up of a service company. She has compiled information on costs as follows:  With the cost data provided, determine the fixed costs and variable cost per km.

Accepted Answer

The answer of Shannon Vale is considering the start-up of...

Question 11

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. At what percent utilization would the monthly net income be $52,000?

Accepted Answer

To achieve a monthly net income of $52,000, we first need to calculate the total required revenue. The fixed costs are $720,000 per year, which translates to $60,000 per month. To achieve a net income of $52,000, the total revenue needs to cover both the fixed costs and the desired net income: $60,000 (fixed costs) + $52,000 (desired net income) = $112,000.The contribution margin per lamp is the selling price minus the variable cost: $200 - $120 = $80. To find out how many lamps need to be sold to achieve the total required revenue of $112,000, we divide the total required revenue by the contribution margin per lamp: $112,000 / $80 = 1,400 lamps.To find the percent utilization, we divide the number of lamps needed by the maximum production capacity and then multiply by 100: (1,400 / 2,000) * 100 = 70%.

Question 12

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. At 75% capacity, what is Cliff's net income?

Accepted Answer

The answer of Cliff runs a restaurant in a small...

Question 13

Anderson Ltd. Manufactured 10,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost).  If variable cost and fixed costs remain unchanged, calculate the total cost to produce 12,000 units.

Accepted Answer

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Question 14

Mentis Ltd. Manufactured 350,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost).  If variable cost and fixed costs remain unchanged, calculate the total cost to produce 385,000 units.

Accepted Answer

The answer of Mentis Ltd. Manufactured 350,000 units of a...

Question 15

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the break-even volume per month?

Accepted Answer

The break-even volume is the number of units that must be sold to cover the fixed costs. The formula for break-even volume is:Break-even volume = Fixed costs / (Unit selling price - Unit variable cost)In this case, the fixed costs are $720,000, the unit selling price is $200, and the unit variable cost is $120. Plugging these values into the formula, we get:Break-even volume = $720,000 / ($200 - $120) = 750 lampsTherefore, the break-even volume is 750 lamps per month.

Question 16

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. If fixed costs are increased by 10% per week, by how much will this lower the net income?

Accepted Answer

The increase in fixed costs by 10% is calculated as $9,000 * 10% = $900. This increase in fixed costs directly reduces the net income by the same amount, as it does not affect the revenue or the variable costs per unit.

Question 17

Juniper Ltd. Manufactured 98,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost).  If variable cost and fixed costs remain unchanged, calculate the total cost to produce 62,000 units.

Accepted Answer

The answer of Juniper Ltd. Manufactured 98,000 units of a...

Question 18

Mike Babchuck is considering the start-up of a service company. He has compiled information on costs as follows:  With the cost data provided, determine the variable cost per km.

Accepted Answer

The answer of Mike Babchuck is considering the start-up of...

Question 19

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. What is the break-even point expressed as a percent of capacity?

Accepted Answer

The break-even point is calculated by dividing the fixed costs by the contribution margin per unit. The contribution margin per unit is the selling price per unit minus the variable cost per unit, which is $18 - $6 = $12. The fixed costs are $12,000. Therefore, the break-even point in units is $12,000 / $12 = 1,000 meals. To find the break-even point as a percent of capacity, divide the break-even point in units by the capacity and multiply by 100. So, (1,000 meals / 2,000 meals) * 100 = 50%.

Question 20

Cliff runs a restaurant in a small town known for its theatres and tourist attractions. Cliff charges an average of $18 per meal. He estimates his variable costs to be $6 per meal and fixed costs are $12,000 per month. Cliff has the capacity to serve 2,000 meals per month. At full capacity, what is Cliff's net income?

Accepted Answer

Net income can be calculated by subtracting total costs from total revenue. Total revenue at full capacity (2,000 meals at $18 each) is $36,000. Total variable costs are $6 per meal, so for 2,000 meals, that's $12,000. Adding the fixed costs of $12,000, total costs are $24,000. Subtracting total costs ($24,000) from total revenue ($36,000) gives a net income of $12,000.

Quiz 5: Cost-Volume-Profit Analysis

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. How many dolls must be sold each week to produce a net income of $2250?

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the monthly net income at a volume of 1800 lamps per month?

Sherry Tomason is considering the start-up of a delivery company service. She has compiled information on costs as follows: With the cost data provided, determine the fixed costs per month.

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. How many dolls must be sold each week to produce a net income of $1125?

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. At what percent utilization would the monthly net income be $44,000?

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the monthly net income if Cando operates at 60% capacity?

Shannon Vale is considering the start-up of a service company. She has compiled information on costs as follows: With the cost data provided, determine the fixed costs and variable cost per km.

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. At what percent utilization would the monthly net income be $52,000?

Anderson Ltd. Manufactured 10,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost) . If variable cost and fixed costs remain unchanged, calculate the total cost to produce 12,000 units.

Mentis Ltd. Manufactured 350,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost) . If variable cost and fixed costs remain unchanged, calculate the total cost to produce 385,000 units.

Cando Manufacturing makes lamps that retail at $200 each. The unit variable cost is $120, and the fixed costs are $720,000 per year. Cando can produce a maximum of 2,000 lamps per month. What is the break-even volume per month?

A small company can produce 500 dolls per week. The doll retails for $30. The variable costs are $7.50 per doll and fixed costs are $9,000 per week. If fixed costs are increased by 10% per week, by how much will this lower the net income?

Juniper Ltd. Manufactured 98,000 units of a product last year and identified the following manufacturing and overhead costs (V denotes variable cost and F denotes fixed cost) . If variable cost and fixed costs remain unchanged, calculate the total cost to produce 62,000 units.

Mike Babchuck is considering the start-up of a service company. He has compiled information on costs as follows: With the cost data provided, determine the variable cost per km.