Question 2) 35% Key: Break Even Concept and Calculation of Total Cost, Total Rev
ID: 1094449 • Letter: Q
Question
Question 2) 35% Key: Break Even Concept and Calculation of Total Cost, Total Revenue and Total Profit. FC= $8,000 VC $10 Selling Price=100 BEP=?. A. Draw BEP Chart Show Total Cost and Total Profit Charts and BEP and explain each concept in detail. B. Calculate Total Profit @500 units sold Question 3) 20% ?optional Key: Effective Interest Rate calculations when cash flow and compounding periods needs adjustments. 1. Illustrate the cash flow Diagram YEAR 0 2 4 6 8 CASH FLOW 0 1 1 1 1 Given ia = 10% 2. Calculate ieff = ? between two consecutive cashflows 3. Calculate F@8 Use F/A compound factor.Explanation / Answer
Q2)Total cost = fixed cost + variable cost
Total cost = $ 8000 + X $10
where X = no of units
Total cost for 500 units = $ 8000 + $5000= $ 13,000
Total revenue = selling price X no of units sold = 100 X 500 = $ 50,000
Total profit = Total revenue - Total cost = 50,000 - 13,000 = $ 37,000
BEP(output) = Fixed cost / contribution = 8000/10 = 800 units
BEP (sales)= outputX selling price per unit = 500X100 = $50,000
The break even graph is shown at the bottom
Q3) The cash flow diagram is shown at the bottom:
2)
To calculate ieff
stated interest rate = 10%
Compounding period = 2 years
ieff = (1+10/24)2
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