QUESTION 9 A company currently sells for $100 a product that has a variable cost per unit of $48. Fixed costs are $910,000 and not expected to change in the next period. If the company desires to reduce its break-even point by 1,250 units, by how much must they reduce variable costs? OA $5.00 OB. $3.75 OC. $4.00 OD. $5.25

QUESTION 9 A company currently sells for $100 a product that has a variable cost per unit of $48. Fixed costs are $910,000 and not expected to change in the next period. If the company desires to reduce its break-even point by 1,250 units, by how much must they reduce variable costs? OA $5.00 OB. $3.75 OC. $4.00 OD. $5.25

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 4MC

See similar textbooks

Similar questions

Lin Corporation has a single product whose selling price is $135 per unit and whose variable expense is $81 per unit. The company's monthly fixed expense is $23,700. Required: 1. Calculate the unit sales needed to attain a target profit of $6,000. (Do not round intermediate calculations.) 2. Calculate the dollar sales needed to attain a target profit of $9,300. (Round your intermediate calculations to the nearest whole number.) 1. Units sales to attain target profit 550| units 2. Dollar sales to attain target profit
Problem1: A summer camp for youngsters has the following data: Charge per camper (selling price) Fixed costs $144 $4800 Variable cost per camper Capacity 1. Write the total revenue equation. 2. Write the total cost equation. 3. Determine the breakeven point in units. 4. Calculate the breakeven point in dollars. 5. If fixed costs decrease 10%, what is the new breakeven point in units and in dollars? 6. What is the profit or loss of the session if the camp operates at 80% capacity? Problem 2: A company is considering a capital cost of $80000 to acquire new machinery. The expected annual revenue is $45000. After 6 years its salvage value will be $15000. An overhaul costing $10000 will be needed in year 3. The operation and maintenance cost (O&M) will be $5000 per year. Complete the corresponding table and cashflow diagram below. a. Cash flow table Year 0 1 2 3 4 5 6 $96 200 campers Capital Cost Annual Revenue b. Cash flow diagram O&M Overhaul Salvage Cost
3. Product A currently sells for $12 per unit. The variable cost is $4 per unit and 10,000 units are sold annually and a profit of $30,000 is realized yearly. A new design of this product will increase the variable cost by 20% and fixed cost by 10% but sales will increase to 12,000 units per year. At what selling price do the break even occurs for the new design?
VT Company's breakeven point is 4,000 units. It's product sells for $20 per unit and has a variable cost of $15 variable cost per unit. What is the company's total fixed cost amount? O 40,000 O Not enough information O 80,000 O 20,000 60,000
Cost Analysis A company manufactures fuel tanks for cars. The total weekly cost (in dollars) of producing X fuel tanks is given by.. C(x) = 10000 +90x - 0.05x² %3D Find the exact cost of producing the 501st item. (Round to the nearest 2 decimal places, if needed) HINT: Steps to fiınd actual or exact (cost/revenue/profit) 1. Find the cost of x = 5003B 2. Then find the cost of x = 501%3; 3. Then subtract ASUS 3 近

The figure shows graphs of the total cost function and the total revenue function for a commodity. (Assume cost and revenue are measured in dollars.) 500 400 300 200 100 میرا 10 20 30 (a) Label each function correctly. function A -Select- function B -Select- (b) Determine the fixed costs. (c) Locate the break-even point. A B 40 50 60 Determine the number of units sold to break even. units (d) Estimate the marginal cost MC and marginal revenue MR. MC = MR-
1 If a firm buys a specialized metal stamping machine that will last 4 years for $125,000 and cannot resell it, the sunk cost is $0 $31,250 $125,000 $93,750 2 Variable costs are a production expense that does not vary with output. a production expense that changes with the quantity of output produced. equal to total cost divided by the units of output produced. the amount by which a firm's cost changes if the firm produces one more unit of output. 3 Suppose the total cost of producing T-shirts can be represented as TC 50 + 2q. The marginal cost of the 5th T-shirt is 10 12 60 4 A firm's cost curve is determined by congressional laws. whether the firm hires engineers or not. natural laws. the firm's production function. 5 Isocost lines represent the combinations of inputs that have the same marginal cost. represent the combinations of inputs that have the same total cost. are the inverse of the isoquant lines. represent supply and demand for inputs at a given cost. 6 A cost function has…
At what output level is variable costs per unit at a minimum? Supporting Materials Steel Costs $ per ton MC ATC $175 AVC $115 $70 4,000 9,000 11,000 16,500 Steel Outp ut (in tons)
Output Variable Total AVC AFC ATC MC (boxes) Cost Cost $0 $10 1 $20 $15 3 $69 $3.33 $23 4. $2.50 $27 $39
10. Smart Phones, Inc. buys one model of smartphone, paying $2370 per case of 20 phones. Find the asking price for each assuming a 40% markup on cost.
A special shoe manufacturer ABC Co. has costs of production as follows : Quantity: 0 1 2 3 4 5 6Total Variable Cost ($): 0 50 70 90 140 200 360 Fixed costs are $100 and the price of ABC shoe is $50 (a) The chief financial officer tells the CEO that it’s better to produce only one shoe this month. What could be the reason for this advice by the CFO? What are the firm’s profits at that level of production? Is this the best decision? Explain.
Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data: Variable costs (per unit) ($) Process type Annualized fixed cost labor material energy Of plant & equip. Intermittent $1,000,000 24 26 20 Mass customization $1,190,000 30 18 12 Repetitive $1,385,000 28 15 11 Continuous $1,660,000 25 15 10 Determine the most economical…