Question

Question 3 A firm manufactures two products, X and Y. Product X is sold for $100 and its variable cost is $50; product Y is sold for $140 and its variable cost is $35. It is anticipated that 500 units of product X and 700 units of product Y can be sold in the coming year. If the total fixed cost is $5,000 per month, determine the break-even point in dollars for the coming year F Formula: BEP, ((1-(V, / P))xw) Question 4 Explain the ABC analysis in classifying inventory items, and how is it related to cycle counting policy?

Answer 1

3. Revenue =

For product X= $100× 500= $50000

For product Y= $140× 700= $98000

Total revenue generated= $148000

Variable cost =

For product X= $50× 500= $25000

For product Y= $35 × 700= $24500

Total variable cost = $49500

Contribution margin = $148000 - $49500 = $98500

Total Fixed cost = $5000

BEP= F/ ((1-(V_{​​​​​​x}/P_{​​​​​​x})) ×w_x) + ((1-(V_{​​​​​​y}/P_{​​​​​​y}))×w_y)

BEP= $5000/ ((1-($50/$100))×500) + ((1-($35/$140))×700)

BEP= $5000/ $775=6.45 units = 7 units.