Computer Based Information Systems Project - Breakeven Analysis Beautiful Pots, Inc., a producer of pottery, is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs comprised of $2,000 in rent for a building and $7,200 in salaries per month. The variable costs are comprised of 30 cents for labor, 30 cents for material, and 10 cents for utilities per unit produced. Each item is sold to retailers at a price of $1.50. 1. What volume per month is required in order to break-even? 2. What profit would be realized on a monthly volume of 61,000 units? 87,000 units? 3. What volume is needed to obtain a profit of $16,000 per month? 4. What volume is needed to provide revenue of $23,000 per month? 5. Include a data table to show alternative break-even points, assuming variations in salaries and labor costs. Assume values of labor cost per unit from $ 0.20 to $ 0.60 (increments of $ 0.05) and salaries from $5,000 to $ 9,000 (increments of $ 400) for your analysis. 6. Plot the total cost, revenue, and profit lines.

Computer Based Information Systems Project - Breakeven Analysis Beautiful Pots, Inc., a producer of pottery, is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs comprised of $2,000 in rent for a building and $7,200 in salaries per month. The variable costs are comprised of 30 cents for labor, 30 cents for material, and 10 cents for utilities per unit produced. Each item is sold to retailers at a price of $1.50. 1. What volume per month is required in order to break-even? 2. What profit would be realized on a monthly volume of 61,000 units? 87,000 units? 3. What volume is needed to obtain a profit of $16,000 per month? 4. What volume is needed to provide revenue of $23,000 per month? 5. Include a data table to show alternative break-even points, assuming variations in salaries and labor costs. Assume values of labor cost per unit from $ 0.20 to $ 0.60 (increments of $ 0.05) and salaries from $5,000 to $ 9,000 (increments of $ 400) for your analysis. 6. Plot the total cost, revenue, and profit lines.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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Hyundai Motors is considering three sites-A, B, and C-at which to locate a factory to build its new-model automobile, the Hyundai Sport C150. The goal is to locate at a minimum-cost site, where cost is measured by the annual fixed plus variable costs of production. Hyundai Motors has gathered the following data: Site A B C Annualized Fixed Cost $11,000,000 $20,000,000 $25,000,000 Variable Cost per Auto Produced $2,600 $2,000 $1,000 The firm knows it will produce between 0 and 60,000 Sport C150s at the new plant each year, but, thus far, that is the extent of its knowledge about production plans. a) The value of volume, V, of production above which site C is recommended= 8751 Sport C150s (round your response up to the next whole number). b) The value of volume, V, of production below which site A is recommended=Sport C150s (round your response up to the next whole number).
Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: Before Automation AfterAutomation Sales revenue $ 196,000 $ 196,000 Less: Variable cost 107,000 41,000 Contribution margin $ 89,000 $ 155,000 Less: Fixed cost 11,000 60,000 Net operating income $ 78,000 $ 95,000 Required: 1. Calculate Lobster Trap’s break-even sales dollars before and after automation. 2. Compute Lobster Trap’s degree of operating leverage before and after automation.
Company XYZ is conducting an engineering economic analysis to decide whether to make vs purchase position for a necessary element needed ins several products. Now the engineering department has established this information: Option A to purchase 10,000 units annually at a fixed price of $8.50 per unit. The cost of placing the order is insignificant as per the present cost accounting procedure. Option B to manufacture 10,000 units annually with a direct labor cost of $1.50 per unit, manufacturing overhead cost is allotted at 200% of direct labor (which is $3.00 per unit) ) and Direct materials cost at $5.00 per unit. Based on the information, should the unit be purchased or manufactured?
We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 150,000 kilometres during a year, the average operating cost is 11.9 cents ($0.119) per kilometre. If a truck is driven only 94,000 kilometres during a year, the average operating cost increases to 13.9 cents ($0.139) per kilometre. Required: 1. Using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) High level of activity Low level of activity Change Variable cost per kilometer Fixed cost per year = Kilometers Driven 2. Express the variable and fixed costs in the form Y= a + bX. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) Total Annual Cost Total annual cost 3. If a truck were driven 127,000 kilometres during a year, what total cost would you expect to be…
A company is analyzing a make-versus-purchase situation for a component used in several products, and the engineering department has developed these data:Option A: Purchase 10,000 items per year at a fixed price of $8.50 per item. The cost of placing the order is negligible according to the present cost accounting procedure. Option B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials = $5.00 per item and direct labor = $1.50 per item. Manufacturing overhead is $3.00 per item. Based on these data, should the item be purchased or manufactured?
Crane Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not affect the quality of the product. The estimated manufacturing costs by the two methods are as follows. Direct materials Direct labor Variable overhead Fixed manufacturing costs (a) Crane' market research department has recommended an introductory unit sales price of $40.00. The selling expenses are estimated to be $622,000 annually plus $2.00 for each unit sold, regardless of manufacturing method. (b) Capital-Intensive $6.00 per unit $7.00 per unit $4.00 per unit Your answer is correct. $3,200,000 Calculate the estimated break-even point in annual unit sales of the new product if Crane Company uses the: 1. Capital-intensive manufacturing method. 2. Labor-intensive manufacturing method. Break-even point in units eTextbook and Media Labor-Intensive $7.00 per unit $10.00 per unit $5.50 per unit…
We Deliver operates a fleet of delivery trucks in Halifax. Analysis shows that if a truck is driven 159,000 kilometres during a year, the average operating cost is 12.0 cents ($0.120) per kilometre. If a truck is driven only 85,000 kilometres during a year, the average operating cost increases to 13.9 cents ($0.139) per kilometre. Required: 1. Using the high–low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) 2. Express the variable and fixed costs in the form Y = a + bX. (Do not round your intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.) 3. If a truck were driven 139,400 kilometres during a year, what total cost would you expect to be incurred? (Do not round intermediate calculations. Round the "Variable cost per kilometer" to 3 decimal places.)
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A large electronics manufacturer is considering outsourcing the manufacturing of a diaphragm used in its large speaker. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and management, amounts to$6.9million. The variable costs of labor and material are$7per unit. The company has an offer from a major subcontractor to produce the part for \$12 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The electronics company estimates that the total cost would be$3.4million, which also includes management oversight for the new supply contact. The company must consume more than diaphragms to make the manufacturing the part in-house option least costly. (Enter your response rounded up to the nearest whole number.).