Homework Answers
Break even point in units = Fixed costs/contribution margin per unit
Break even in dollars = fixed costs/contribution margin ratio
France
Units = 7200,000/(300-100-80) = 60,000 units
Revenue = 7,200,000/40% =$ 18,000,000
Brazil
Units = 5265000/(300-95-70) = 39000 units
Revenues = 5265000/0.45 =$11,700,000
US
Units = 14595000/(300-120-75) = 139000 units
Revenue = 14,595,000/0.35 = 41700,000
Operating income = sales revenue- variable costs - fixed costs
Another way is (contribution margin *number of units) - fixed costs
France = 90,000*120 - 7,200,000 =$3,600,000
Brazil = 90,000*135 - 5265,000 =$6885000
US = 90,000*105 - 14,595,000 =-$5,145,000
Brazil has lowest since lowest fixed cost and lowest variable cost
Brazil will have
Higher, operating loss is budgeted
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Comfy Carpets Inc., is considering three possible countries for
the sole manufacturing site of its newest area rug:
ItalyItaly,
FranceFrance,
and
SingaporeSingapore.
All area rugs are to be sold to retail outlets in the United
States for
$ 280$280
per unit. These retail outlets add their own markup when selling
to final customers. Fixed costs and variable cost per unit (area
rug) differ in the three countries.
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the sole manufacturing site of its newest area rug:
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FranceFrance,
and
SingaporeSingapore.
All area rugs are to be sold to retail outlets in the United
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per unit. These retail outlets add their own markup when selling
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rug) differ in the three countries.
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are $31,000, while the variable costs are $450 per slab. The
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