Intermediate Financial Management
14th Edition
ISBN: 9780357516782
Author: Brigham, Eugene F., Daves, Phillip R.
Publisher: Cengage Learning
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Chapter 23, Problem 6MC
Summary Introduction
Case summary:
Person A the
She planned to use an example of Company’s “big ticket” items which is a customized computer microchip used in the company’s laptop. She planned to start the discussion by explaining some basic inventory concept. She asked person X to help her by way of answering the questions.
Characters in the case:
Person A- Financial manager of Company W
Person FW- CEO of the company
Person X-Assistant of person A
To determine: The inventory level Company W should reorder.
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Students have asked these similar questions
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
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:
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?
Chapter 23 Solutions
Intermediate Financial Management
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- 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_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
- Suppose 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_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_forwardWhat 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_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_forwardAssume 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_forward
- If 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_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_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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