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Take a Test Junor Jean-Baptiste Google Chrome https:// www.mathxl.com /Student/PlayerTest aspx?testld 3108444 108&centerwin; yes&fromPlayerCheck; yes Junor Jean-Baptiste 8/9/15 10:10 AM Test: Final Summer III Overview This Question: 1 pt This Test: 5 pts 0 of 5 complete Remaining: 01:56:47 Peggy Lane Corp., a producer of machine tools, wants to move to a larger site. Two alternative locations have been identified: Bonham and McKinney. Bonham would have fixed costs of $780,000 per year and variable costs of $15,000 per standard unit produced. McKinney would have annual fixed costs of $920,000 and variable costs of $14,000 per standard unit. The finished items sell for $29,000 each. a) The volume of output at which both the locations have the same profit standard units (round your response to the nearest whole number) b Based on the analysis of the volume, after rounding the numbers to the nearest whole number, Bonham is superior below v standard units. c Based on the analysis of the volume, after rounding the numbers to the nearest whole number, McKinney is superior above standard units d The break-even point for Bonham is units. Enter your response rounded to the nearest whole number.) The break-even point for McKinney is units. (Enter your response rounded to the nearest whole number.) GA Malwarebytes AntiMalware Scan Complete Non-Malvare Detected Enter your answer in each of the answer boxes Malwarebytes Anti-Malware has finished scanning your system and one or more potentially unwanted objects has been detected Previous Quest Click here to view details 10 10 AM 8/9/2015

Explanation / Answer

Calculation of Breakeven- point :-

Particulars                                               Bonham Location                    McKinney Location

Qty (assumed)                                            100                                               100

Sales (29,000/-)                                      $ 29,00,000                                  $ 29,00,000

V.Cost   ($15,000)/14,000                    $ 15,00,000,                                 $ 14,00,000

Gross Profit                                            $ 14,00,000                                $ 15,00,000

Fixed Cost                                               $ 7,80,000                                 $ 9,20,000    

Net Profit                                               $ 6,20,000                                   $ 5,80,000         

            

A) GP ratio = GP/ Sales

Bonham Location =    $ 14,00,000/ $ 29,00,000= 48.28%

McKinney Location = $ 15,00,000/ $ 29,00,000 = 51.73%

B)Contribution Margin = V.Cost/Sales

Bonham Location =    $ 15,00,000/ $ 29,00,000=   51.73%

McKinney Location = $ 14,00,000/ $ 29,00,000 = 48.28%

C)Break Even Point (( per qty sales price) :- Fixed Cost/ Contribution Margin

Bonham Location =    $ 7,80,000/ 51.73% = 15,078 ( per qty sales price)

McKinney Location = $ 9,20,000/ 48.28% =19,055 (( per qty sales price)

D)Break Even Point (( in qty) :- Fixed Cost/ (SP-V.COST)

Bonham Location =    $ 7,80,000/ ($29,000- 15,000) = 55 QTY

McKinney Location = $ 9,20,000/ ($ 29,000-14,000) = 61 QTY

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