Question

A plant operation has fixed costs of $3,000,000 per year, and ts output capacity is 100,000 electrical appliances per year. The vaniable cost is $30 per unit, and the product sells for $90 per unit a. Construct the economic breakeven chart b. Compare annual profit when the plant is operating at 70% of capacity with the plant opera on at 100% capacity Assume that the frst 70% of capacity output s sold at 90 per unit and that the remaining 30% of production is sold at $70 per unit a. Use the line drawing tool to plot the lines that represent the Fixed Cost, Total Revenue, and Total Costs Be sure to properly label your lines Use the point drawing tool to plot the Breakeven point Be sure to properly label the point 10.000000 0182000 Revenue 8,000 7.000 6,000 5,000 4,000 3.000 Cost 11000 10 t0

Answer 1

a) D = 3,000,000 / ($90 - $30) = 50,000 Units per year

Graph enclosed

b) Profit (Loss) = Total Revenue - Total Cost

(70%) Capacity) = [70,000 * $90] - [3,000,000 + (70,000 * $30)] = 1,200,000

(100%) Capacity) = [70,000 * $90 + 30,000 * $70] - [3,000,000 + (100,000 * $30)] = 2,400,000

3,000,00050,00Units per year P-ev($90 S30) 10,000.000 otal 8,000 000 7.000,00 6 000 000 5,000 4,000 3.000 2.000 11000 PROFIT Breakeven point Loss D'- 50,000 units 100 000 b) Profit (Loss) Total Revenue - Total Cost (70%) Capacity)-(70,000 * (100%) Capacity)-170,000 * $90 + 30,000 * $70]-[3,000,000 + (100,000 * $30)-2,400,000 $90]-[3,000,000 + (70,000 * $30)]-1,200,000