Question

1. (T/F) In a break-even analysis problem, if the unit variable cost is decreased, the break-even...

1. (T/F) In a break-even analysis problem, if the unit variable cost is decreased, the break-even point decreases.

2. (T/F) The choice of which process structure to select is based on two main characteristics: volume and degree of customization.

3. Which of the following basic types of process structures is one which equipment, personnel, and work processes that perform the same function are grouped together?

a.Project

b.Assembly line

c.Continuous process

d.There is no such layout

e.Workcenter

4. You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 16,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?

a.The company will recover its initial investment

b.The company should invest

c.The company will not recover its investment

d.The break-even is lower than the 16,000 units

e.It's a good investment

Business   Operations-Management   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Q1) Answer is True

Break Even Point = Fixed Cost per unit/(Selling Price - Variable Cost per unit)

Hence if VC/unit decreases, the denominator(Contribution Margin) increases and hence BEP decreases.

Q2) Answer is True

Quantity/Volume and level of customization defines the process structure or type in a manufacturing organization.

Q3) Answer is - e.Workcenter

Workn Center layout is considered as a mini-plant where a smaller set of machines, personnel and process are grouped together.

Q4) Answer is - c.The company will not recover its investment

Investment/Fixed cost (FC) = 256000 $

Variable cost (VC) = 15 $/unit

Selling Price (SP) = 30 $/unit

Total demand = 16000 units

Total costs = 256000+(16000*15) = 496000 $

Total Revenue = 16000*30 = 480000 $

As life time costs > life time revenues, the firm will not recover its investment.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Break-Even Point Hilton Enterprises sells a product for $115 per unit. The variable cost is $76...
Break-Even Point Hilton Enterprises sells a product for $115 per unit. The variable cost is $76 per unit, while fixed costs are $357,435. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $123 per unit. a. Break-even point in sales units units b. Break-even point if the selling price were increased to $123 per unit units Target Profit Trailblazer Company sells a product for $245 per unit. The variable...
Break-Even Sales Currently, the unit selling price of a product is $320, the unit variable cost...
Break-Even Sales Currently, the unit selling price of a product is $320, the unit variable cost is $260, and the total fixed costs are $918,000. A proposal is being evaluated to increase the unit selling price to $350. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units
Break-Even Sales Currently, the unit selling price of a product is $320, the unit variable cost...
Break-Even Sales Currently, the unit selling price of a product is $320, the unit variable cost is $260, and the total fixed costs are $810,000. A proposal is being evaluated to increase the unit selling price to $350. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units
Break-Even Sales Currently, the unit selling price of a product is $230, the unit variable cost...
Break-Even Sales Currently, the unit selling price of a product is $230, the unit variable cost is $190, and the total fixed costs are $448,000. A proposal is being evaluated to increase the unit selling price to $260. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased to the proposed $260, and all costs remain constant. units
Break-Even Sales Currently, the unit selling price of a product is $230, the unit variable cost...
Break-Even Sales Currently, the unit selling price of a product is $230, the unit variable cost is $190, and the total fixed costs are $420,000. A proposal is being evaluated to increase the unit selling price to $260. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased to the proposed $260, and all costs remain constant. units
Break-Even Point Nicolas Enterprises sells a product for $95 per unit. The variable cost is $43...
Break-Even Point Nicolas Enterprises sells a product for $95 per unit. The variable cost is $43 per unit, while fixed costs are $1,116,752. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $102 per unit. a. Break-even point in sales units units b. Break-even point if the selling price were increased to $102 per unit units
Break-Even Point Nicolas Inc. sells a product for $62 per unit. The variable cost is $38...
Break-Even Point Nicolas Inc. sells a product for $62 per unit. The variable cost is $38 per unit, while fixed costs are $69,120. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $68 per unit. a. Break-even point in sales units units b. Break-even point if the selling price were increased to $68 per unit units
Break-Even Point Hilton Enterprises sells a product for $104 per unit. The variable cost is $51...
Break-Even Point Hilton Enterprises sells a product for $104 per unit. The variable cost is $51 per unit, while fixed costs are $1,160,117. Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $110 per unit. a. Break-even point in sales units units b. Break-even point if the selling price were increased to $110 per unit units
Project #1 - Break Even Analysis A simple break even analysis asks the question: How many...
Project #1 - Break Even Analysis A simple break even analysis asks the question: How many books do you have to sell in order to make back your initial investment, otherwise known as breaking even. We make this calculation by looking at the total income, or gross sales, and equating it to the sum of the fixed costs, variable costs and profit from the items. Breaking even means that you go from negative profit to positive profit and the actual...
Sales mix and break-even analysis Conley Company has fixed costs of $15,525,000. The unit selling price,...
Sales mix and break-even analysis Conley Company has fixed costs of $15,525,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products follow: Product Selling Price Variable Cost per Unit Contribution Margin per Unit Yankee $175 $100 $75 Zoro 255 180 75 The sales mix for products Yankee and Zoro is 20% and 80%, respectively. Determine the break-even point in units of Yankee and Zoro of the overall (total) product, E. If...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT