Required contribution margin = $12,000,000+15,000,000 Required contribution margin = $27,000,000 Required contribution margin per unit = $27,000,000/175,000 Required contribution margin per unit = $154.29 Selling price per unit = Variable cost + Contribution margin Selling price per unit = $12.80 + $154.29 Selling price per unit = $167.09 Fixed cost increases Increase Variable cost per unit decreases Decrease Increase in debt No Change When a large percentage of a firms costs are fixed, the firm is said to have a high degree of operating leverage.
To be profitable, a firm has recover its costs. These costs include both its fixed and...
1. Break-even analysis To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $12,000,000. The...
1. Break-even analysis To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The...
1. Break-even analysis To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Free Spirit Industries Inc.: Free Spirit Industries Inc. is considering a project that will have fixed costs of...
SO CIL PICCOLO DE Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $41.50 per unit, and will incur a variable cost of $12.80 per unit. Given Blue Mouse's cost structure, it will have to sell 348,432 units to break even on this project (QBE). Blue Mouse's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she...
4. Break-even analysis To be profitable, a firm has recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Petrox Oil Co.: Petrox Oil Co. is considering a project that will have fixed costs of $10,000,000. The...
Are my answers right? Consider the case of Free Spirit Industries: Free Spirit Industries is considering a project that will have fixed costs of $12,000,000. The product will be sold for $32.50 per unit, and will incur a variable cost of $10.75 per unit. Given Free Spirit's cost structure, it will have to sell 551,724 units to break even on this project (Que). Free Spirit Industries's marketing sales director doesn't think that the market for the firm's goods is big...
Blank space answer: 1) 122,137 / 337,913 / 522,648 / 308,434 2) low / high To be profitable, a firm has recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Petrox Oil Co.: Petrox Oil Co....
Free Spirit Industries Inc. is considering a project that will have fixed costs of $10,000,000. The product will be sold for $37.50 per unit, and will incur a variable cost of $12.80 per unit. Given Free Spirit's cost structure, it will have to sell 404,858 units to break even on this project (QBE). Free Spirit's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she believes that the...
Dynamic Defenses Corporation is considering a project that will have fixed costs of $10,000,000. The product will be sold for $37.50 per unit, and will incur a variable cost of $10.75 per unit. units to break even on this project (QBE). Given Dynamic Defenses's cost structure, it will have to sell Dynamic Defenses Corporation's marketing sales director doesn't think that the market for the firm's goods is big enough to sell enough units to make the company's target operating profit...
(15-1). Break-Even Quantity Shapland Inc. has fixed operating costs of $500,000 and variable costs of $50 per unit. If it sells the product for $75 per unit, what is the break-even quantity? F = $500,000 V = $50 P = $75 QBE