Question

A factory of ratio produces 400 units per month and sells them at $1, 800. 00...

A factory of ratio produces 400 units per month and sells them at $1, 800. 00 each. Dividens are 8% on the 8,000 shares with par value of $250.00 each. The fix operating cost per month is $25,000.00. Other costs are $1,000.00 per unit. Determine the break even point. If only 200 units were produced per month, determine the profit or loss.

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Answer #1

BREAK EVEN POINT = 31.25 UNITS

Calculation

Break even point is the point of sales volume at which total revenue is equal to total cost .

Break even point = Fixed Cost /(Selling price per unit -variable cost per unit)

= 25000 / (1800-1000)  

= 31.25 units

PROFIT OR LOSS IF ONLY 200 UNITS IS PRODUCE PER MONTH   

PROFIT = 135000

Calculation

Sales = 360000 (200*1800)

Less

Variable cost = 200000 (200*1000)

Contribution = 160000

less

Fixed cost = 25000

PROFIT 135000   

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