1. A company that makes cell phones has the following coststructure. The have fixed costs of $145 000 per period andmanufacturing costs of $15.16 per cell phone. Advertising isexpected to be $25 000 per period and a special promotional contestwill involve providing a free case for a cost of $5.30 per cellphone. Each cell phone sells for $49.95. What is the break-evenpoint in the number of phones?
2. A pen manufacturer makes luxury pens. The pen case costs$7.26 each, the ink holder costs $1.26 each, the spring costs $.07each and the velvet pen case costs $0.91 each. The plant hasgeneral and administrative costs of $55 000 and fixed sellingexpenses of $37 500. The pens sell of $39.95 each. Plant capacityis 4 000 pens per period. At what percentage of capacity is thebreak-even point?
3. A local health care facility has fixed costs per month of$187 400. They also have patient costs of $4.15 per day per patientfor linen and cleaning, medication costs are $23.32 per patient perday and lab tests cost $75.61 per patient per day. The governmentis considering allowing the health care facility to charge eachpatient and amount to recover his or her costs and to make a"profit" of $15 000 per month. The health care facility averages690 patients per month. The VP-Finance for the facility wants youto calculate the daily rate charge per patient. Your answeris:
4. A company that makes optical computer input devices hascalculated their revenue and costs as follows for the most recentfiscal period:
Sales ?$522 000
Costs:
?Fixed Costs? $145 000
?Variable Costs ?208 800
Total Costs ?353 800
Net Income ?$168 200
?What is the break-even point in sales dollars?
5. A company that makes environmental measuring devices hascalculated their revenue and costs as follows for the most recentfiscal period:
Sales ?$750 000
Costs:
?Fixed Costs? $200 000
?Variable Costs ?250 000
Total Costs ?450 000
Net Income ?$300 000
?What is the break-even point in sales dollars?
6. A company that makes audio computer input devices hascalculated their revenue and costs as follows for the most recentfiscal period:
Sales ?$723 000
Costs:
?Fixed Costs ?$345 000
?Variable Costs ?404 880
Total Costs ?749 880
Net Income (Loss) ?$(26 880)
The company has a target level of profitability of $35,000 perfiscal period. What sales dollar volume do they have to achieve inorder to achieve their goal?
7. A company that makes basketballs has calculated theirrevenue and costs as follows for the most recent fiscalperiod:
Sales ?$623 000
Costs:
?Fixed Costs ?$???????
?Variable Costs ?404 880
Total Costs ????????
Net Income (Loss) ?$(26 880)
What are the company's fixed costs per fiscal period?
8. A company that makes customized pens has calculated theirrevenue and costs as follows for the most recent fiscalperiod:
Sales ?$100,000
Costs:
?Fixed Costs ?$???????
?Variable Costs ?15 000
Total Costs ????????
Net Income (Loss) ?$(20,000)
What are the company's fixed costs per fiscal period?
9. A local toolmaker makes the best hammers on the market. Thehead of the hammer costs $12.11 and the handle costs $4.37. Ittakes 1.4 minutes to assemble the hammer and the hourly cost is$90.00 for assembly time. The company has fixed operating costs of$22 310 per month. They sell the hammers for three times theirtotal variable cost. The company wants to make a monthly profit of$5000. How many hammers must they sell?
10. A local restaurant has the best meals in town. The averagevariable cost per meal is $22.74 and the desserts are $5.24. Onlyhalf of the patrons order desserts. The restaurant has fixedoperating costs of $112 714 per month. They sell the meals anddesserts for four times their average variable cost per meal. Theycompany wants to make a monthly profit of $75 000. How many mealsmust they sell?
11. A local college hospitality restaurant has the best mealsin town. The average variable cost per meal is $10.25 and thedesserts are $1.25. The restaurant has fixed operating costs of$110 500 per month. They sell the meals and desserts for threetimes their average variable cost per meal. The college wants tomake a monthly profit of $50 000. How many meals must they sell(Round up to nearest whole meal)?
12. A company has variable costs that are 3/8 the value oftheir sales revenues. Total net income for the most recent periodwas a profit of $123 400 and sales were $400 000. The company hasstarted a new marketing campaign that they hope will increasesales, but it will require additional advertising of $11 200. Howmany sales dollars does the company have to generate in order toremain at the same level of profitability as before the new adcampaign?
13. A company has variable costs that are 1/8 the value oftheir sales revenues. Total net income for the most recent periodwas a profit of $50 400 and sales were $500 000. The company hasstarted a new marketing campaign that they hope will increasesales, but it will require additional advertising of $15 000. Howmany sales dollars does the company have to generate in order toremain at the same level of profitability as before the new adcampaign?
14. A company has variable costs that are 4/7 the value oftheir sales revenues. Total net income for the most recent periodwas a profit of $53 770 and sales were $420 000. The company hasstarted a new marketing campaign that they hope will increasesales, but it will require additional advertising of $6400. Howmany sales dollars does the company have to generate in order toremain at the same level of profitability as before the new adcampaign?
15. Excel hardware is introducing a new product on a newproduct line of capacity 800 units per week at a production cost of$50 per unit. Fixed costs are $22,400 per week. Variable sellingand shipping costs are estimated to be $20 per unit. Excel plan tomarket the new product at $110 per unit. What is the break-evencapacity per week?
16. Excel hardware is introducing a new product on a newproduct line of capacity 800 units per week at a production cost of$50 per unit. Fixed costs are $22 400 per week. Variable sellingand shipping costs are estimated to be $20 per unit. Excel plan tomarket the new product at $110 per unit. What would be the weeklynet income at 90% of the capacity?
17. Sala pipe fittings produce pipe elbows and reducers fromstainless steel. The company can process up to 20 000 tonnes ofstainless steel sheets in a year. The company pays the steelcompany $800 per tonne of stainless steel sheets and each tonne isused to manufacture $2000 worth of elbows and reducers. Variableprocessing costs are $470 per tonne and fixed processing costs $3.4million per year at all production levels. Administrative overheadis $3 million per year regardless of the volume of the production.Marketing and transportation costs work out to be $230 per tonne.Determine the break-even volume in terms of percent capacityutilization.
18. Last year, Terrific Copying had total revenue of $475 000,while operating at 60% of capacity. The total of its variable costis $150 000. Fixed costs were $180 000. What is Terrific'scontribution rate?
19. Last year, Terrific Copying had total revenue of $475 000,while operating at 60% of capacity. The total of its variable costis $150 000. Fixed costs were $180 000. What is Terrific'sbreak-even point expressed in dollars of revenue?
20. Last year, Terrific Copying had total revenue of $475 000,while operating at 60% of capacity. The total of its variable costis $150 000. Fixed costs were $180 000. If the current sellingprice, variable costs, and fixed costs are the same as last year,what net income can be expected from revenue of $500 000 in thecurrent year
