Question

Profits R Us has monthly operating costs of $1,000,000. It sells Flying Wedgies for $200 each, and each Flying Wedgie costs $150 to produce.

1. Treating the operating costs as fixed, how many Flying Wedgies do they need to sell each month in order to break even?

2. What will their breakeven revenues be for the month?

Answer #1

Coats R Us Inc., manufactures and sells men’s coats. Each coat
sells for $150 and the variable costs per coat is $80. The
company’s fixed costs are $1,400,000. The company has an income tax
rate of 50%.
Compute contribution margin, contribution margin percentage,
breakeven point in sales units, the revenues needed to
breakeven?
Coats R Us has a target monthly net income of $350,000. What is
its target monthly operating income? How many coats must be sold
each month to...

1. Elite Sportsware sells football jerseys for $50 each. It
costs Elite Sportsware $30 per jersey for materials and labor (this
is their variable Cost of Goods Sold). Operating costs are $75,000
each month (this is their fixed operating expenses per month). How
many football jerseys does Elite Sportsware need to sell each month
to break even? 2. How many football jerseys does Elite Sportsware
need to sell in a month to make $25,000 profit for the month? Use
the...

If company A manufactures t-shirts and sells them to retailers
for US$9.80 each. It has fixed costs of $2625 related to the
production of the t-shirts, and the production cost per unit is
US$2.30. Company B also manufactures t-shirts and selll them
directly to consumers. The demand for its product is p = 15 − x 125
, its production cost per unit is US$5.00 and its fixed cost are
the same as for company A .
(i) Derive the...

Emma owns an Internet business where she sells
weatherproof car floor mats. Her monthly fixed costs are $40,000.
The average price per unit is $25 and the average variable cost per
unit is $15. What is her break-even point?
Remember that your answer will be in “units,” not “dollars,”
as you are finding the number of items that need to be sold in
order to break even.
Andrew rents rooms in his hotel for an average of $92
per night....

James Motors sells a single product with a selling price of $400
with variable costs per unit of $160. The company’s monthly fixed
expenses are $36,000.
What is the company’s break-even point in units?
What is the company’s break-even point in dollars?
How many units will James need to sell in order to realize a
target profit of $48,000?
What dollar sales will James need to generate in order to
realize a target profit of $48,000?

OceanGate sells external hard drives for $200 each. Its total
fixed costs are $30 million, and its variable costs per unit are
$140. The corporate tax rate is 30%. If the economy is strong, the
firm will sell 2 million drives, but if there is a recession, it
will sell only half as many. a. What will be the percentage decline
in sales if the economy enters a recession? b. What will be the
percentage decline in profits if the...

Motors is a small car dealership. On average, it sells a car
for
$27,000,
which it purchases from the manufacturer for
$23,000.
Each month,
Garrett
Motors pays
$48,200
in rent and utilities and
$68,000
for salespeople's salaries. In addition to their salaries,
salespeople are paid a commission of
$600
for each car they sell.
Garrett
Motors also spends
$13,000
each month for local advertisements. Its tax rate is
40%.
Read the requirements
How many cars must
Garrett
Motors sell each...

1. A company's product sells for $150 and has variable
costs of $60 associated with the product. What is its contribution
margin per unit?
a. $150
b. $90
c. $60
d. $40
2. A company's contribution margin per unit is $25. If
the company increases its activity level from 200 units to 350
units, how much will its total contribution margin
increase?
a. $1,250
b. $8,750
c. $3,750
d. $5,000
3. If a company has fixed costs of $6,000 per...

OceanGate sells external hard drives for $200 each. Its total
fixed costs are $30 million, and its variable costs per unit are
$140. The corporate tax rate is 30%. If the economy is strong, the
firm will sell 2 million drives, but if there is a recession, it
will sell only half as many.
a. What will be the percentage decline in sales
if the economy enters a recession?
b. What will be the percentage decline in
profits if the...

OceanGate sells external hard drives for $200 each. Its total
fixed costs are $30 million, and its variable costs per unit are
$140. The corporate tax rate is 30%. If the economy is strong, the
firm will sell 2 million drives, but if there is a recession, it
will sell only half as many.
a. What will be the percentage decline in sales
if the economy enters a recession?
b. What will be the percentage decline in
profits if the...

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