Question

C D E F G H I J K L Acme Shoe Company makes special-style shoes. It has a fixed cost of $1000 for production setup. The variable cost is $30 per pair and each pair sells for $40. 5 Known parameters: 6 Selling price per unit Fixed cost Variable cost per unit What is the breakeven revenue? 10 Input Data Number of units Is it possible to achieve a profit of $45,000 at 4000 units sold by reducing the fixed cost? Why? 13 Results 14 Total revenue 15 Fixed cost 16 Total variable cost 17 Total cost 18 Profit 19 BEP 20 BEPS

please solve and and explain how it was done

thank you

Answer 1

Q1)

At break even, Total Revenue = Total costs

Selling price * Units = Fixed cost + Variable cost per unit *Units

Break even units =

Fixedcost Sellingprice - Variablecostperunit

B Selling price per unit Fixed cost Variable cost per unit 1000 30 Break even units =B2/(B1-B3) Break even revenue =B5*B1

2 1 Selling price per unit Fixed cost 3 Variable cost per unit 4 5 Break even units 40 1000 30 100 6 7 Break even revenue 4000

(ii)

А Selling price per unit Fixed cost Variable cost per unit 1000 Number of units 4000 =B5*B1 I=B2 Total revenue Fixed cost Total variable cost Total cost Profit =B5*B3 =B9+B8 =B7-B10

C D E F G H А 1 Selling price per unit 2 Fixed cost 3 Variable cost per unit 4 5 Number of units B 40 1000 30 4000 9 7 Total revenue 160000 Fixed cost 1000 Total variable cost 120000 10 Total cost 121000 11 Profit 39000 12 13 Current profit is $39000. Even if the fixed cost is O, the profit would be $40000. 14 It is not possible to achieve a profit of $45000 at 4000 units by reducing the fixed cost 15 16