Intermediate Financial Management
14th Edition
ISBN: 9780357516782
Author: Brigham, Eugene F., Daves, Phillip R.
Publisher: Cengage Learning
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Chapter 23, Problem 5MC
Summary Introduction
Case summary:
Individual A, money related director of company W, has been inquired by the firm’s CEO, individual F, to assess the company’s stock control techniques and to lead a dialog of the subject with the senior executives. Individual A plans to utilize as a case one of company W’s “big ticket” things, a customized computer a microchip that the firm employments in its portable workstation computers. Each chip costs company W $200, and it must moreover pay its supplier a $1,000 setup charge on each arranges; the minimum the arrange measure is 250 units. Webster’s yearly usage of the figure is 5,000 units, and the yearly carrying fetched of this thing is assessed to be 20% of the normal inventory value. Individual A plans to start her session with the senior executives by looking into a few fundamental stock concepts, after which she will apply the EOQ demonstrate to company W’s microchip stock.
To determine: The company W’s added cost if it orders 400 units at a time rather than the EOQ quantity and what if it orders 600 units.
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1) what is the breakeven selling price per unit for Product A?
2) For product C, assume the selling price cannot change., what variable cost per unit will result in breakeven at 150 units sold?
3) what is the breakeven unit sales for Product F.
Do not give answer in image
How much is the price charged per unit if breakeven point is 8,500 units, variable cost per unit is $150, and total fixed costs is $297,500?
The total cost formula for a company can be modeled by TC
= 12570+ 50x where
x represents the number of items sold. A formula for the company's total income is
modeled with TR
80x, where a represents the number of items sold. This company
will breakeven when its total costs equal its total income.
-
How many items must this company sell to breakeven? Answer:
Chapter 23 Solutions
Intermediate Financial Management
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- What is the breakeven point in units when selling price per unit is $500, variable cost per unit is $300, and total fixed costs are $100,000?arrow_forwardAssume that the situation can be expressed as a linear cost function. Find the cost function in this case. Marginal cost: $60; 120 items cost $8000 to produce. The linear cost function is C(x)= FEEarrow_forwardAssume that the linear cost and revenue models apply. An item costs $13 to make. If fixed costs are $1600 and profits are $5700 when 100 items are made and sold, find the revenue equation. (Let x be the number of items.)R(x) =arrow_forward
- what is the Revenue, cost and profit functions for the problem below? Orange Company buys Product A for P15 per units and sells them for P25 per unit. There areno other variable costs. Fixed cost is P6,000. Use the breakeven formula to determine thefollowing:a. Revenue, cost and profit functions.arrow_forwardHow much would be the net effect on the total segment profit if product B is dropped and discontinued? Assume that by dropping product B, product A would increase A's sales by 80%. How much would be the net effect on the total segment profit? Assume that by dropping product B, product A would decrease A's sales by 20%. Moreover, 30,000 of common costs allocated are avoidable. How much would be the net effect on the total segment profit?arrow_forwardSuppose that the total cost function, in dollars, for the production of x units of a product is given by the equation shown below. C(x) = 4,500 + 30x + 0.2x² Then the average cost of producing x items is represented by the following equation. total cost 4,500 C(x) + 30 + 0.2x (a) Find the instantaneous rate of change of average cost with respect to the number of units produced, at any level of production. (b) Find the level of production at which this rate of change equals zero. X = (c) At the value found in part (b), find the instantaneous rate of change of cost and find the average cost. instantaneous rate of change of cost average cost What do you notice?arrow_forward
- 00 Let the demand function for a product be given by the function D(q) = – 1.55q+ 220, where q is the quantity of items in demand and D(q) is the price per item, in dollars, that can be charged when q units are sold. Suppose fixed costs of production for this item are $3, 000 and variable costs are $10 per item produced. If 34 items are produced and sold, find the following: - A) The total revenue from selling 34 items (to the nearest penny). Answer: $ B) The total costs to produce 34 items (to the nearest penny). Answer: $ mth 141.docx Type here to search 直。 a. dp f6 24 & 2. 5. tab slock altarrow_forwardDozier Company produced and sold 1,000 units during its first month of operations. It reported the following costs and expenses for the month: $ 74,000 $ 37,500 Direct materials Direct labor $ 17,000 29,500 Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing overhead Variable selling expense Fixed selling expense Total selling expense Variable administrative expense Fixed administrative expense Total administrative expense $ 46,500 $ 13,000 20,000 $ 33,000 $ 4,500 26,000 $ 30,500arrow_forwardI If the selling price per unit is $47. Total fixed costs are 55,500 and breakeven volume of sales are 280,000. find variable cost per unit?arrow_forward
- Assume a sales price per unit of $15, variable cost per unit $5, and total fixed costs of $17280. What is the breakeven point in units? O 1152 units. O 3456 units. 1728 units. O None of these answer choices is correct.arrow_forwardIf fixed costs are $500,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?arrow_forwardIf 8,000 units are sold, what is the variable cost per unit sold? If 12,500 units are sold, what is the variable cost per unit sold? If 8,000 units are sold, what is the total amount of variable costs related to the units sold?arrow_forward
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