Use the below table to answer the following questions. Selling Price = $31.00 1.
ID: 2335095 • Letter: U
Question
Use the below table to answer the following questions.
Selling Price = $31.00
1. Determine the sales volume, fixed cost, and variable cost per unit at the break-even point.
2. Determine the expected profit if Solomon projects the following data for Delatine: sales, 4,300 bottles; fixed cost, $33,700; and variable cost per unit, $12.
3. Solomon is considering new circumstances that would change the conditions described in Required b. Specifically, the company has an opportunity to decrease variable cost per unit to $10 if it agrees to conditions that will increase fixed cost to $43,700. Volume is expected to remain constant at 4,300 bottles. Determine the effects on the company’s profitability if this opportunity is accepted.
Sales Volume Fixed Cost Variable Cost 2,300 3,300 4,300 5,300 6,300 Profitability $ 33,700 10 $ 14,600 $ 35,600 $ 56,600 $ 77,600 $ 98,600 33,700 11 12,300 32,300 52,300 72,300 92,300 33,700 12 10,000 29,000 48,000 67,000 86,000 43,700 10 4,600 25,600 46,600 67,600 88,600 43,700 11 2,300 22,300 42,300 62,300 82,300 43,700 12 – 19,000 38,000 57,000 76,000 53,700 10 (5,400 ) 15,600 36,600 57,600 78,600 53,700 11 (7,700 ) 12,300 32,300 52,300 72,300 53,700 12 (10,000 ) 9,000 28,000 47,000 66,000Explanation / Answer
1.
At break even point, a firm earns zero profits and suffers zero losses. From the table given in the question, it can be seen that zero profits occur at the following combination:
Sales volume = 2,300 units
Fixed cost = $43,700
Variable cost = $12 per unit
2.
Calculation of expected profit
3.
Calculation of expected profit
If the opportunity is accepted, profit will fall by $1,400 (48,000 - 46,600)
Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubts. Thanks.
Sales (4,300 x 31) 133,300 Less: Variable cost (4,300 x 12) - 51,600 Contribution 81,700 Less: Fixed cost - 33,700 Profit $48,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.