A firm produces three products. Product A sells for $60; its variable costs are $20. Product B sells for $200; its variable costs are $120. Product C sells for $25; its variable costs are $10
Last year, the firm sold 1000 units of A, 2000 units of B, and 10,000 units of C. The firm has fixed costs of $320,000 per year. Calculate the break-even point of the firm.
Calculations for this problem are:
Product Selling price P Variable cost V V/P 1-V/P Sales Percent of sales Weighted contrib.
A $60 $20 .333 .667 $60,000 .0845 .0564
B $200 $120 .600 .400 $400,000 .5634 .2254
C $25 $10 .400 .600 $250,000 .3521 .2113
$710,000 1.0000 .4931
Break-even for this firm is $320,000/.4931 = $648,956. Note: this result reflects calculator rounding, as students might experience at exam time. Excel reports $649,143.
You might also like to view...
An auxiliary record of notes receivable that provides detailed information about the notes held by a business is known as a notes receivable register
a. True b. False Indicate whether the statement is true or false
Horizontal price fixing is also called resale price maintenance.
Answer the following statement true (T) or false (F)
In France, collective bargaining takes place on 3 levels: _______________________________, industry, and company.
Fill in the blank(s) with the appropriate word(s).
How can a reduction of in-transit inventory be encouraged?
A) supplier location near plants B) high setup costs C) low carrying costs D) use of trains, not trucks E) low-cost, global suppliers