A company has the capacity to generate a revenue of $3,000,000 a year. The break even...

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A company has the capacity to generate a revenue of $3,000,000 ayear. The break even revenue is $2,000,000 a year. From thebreakeven point every $100 extra revenue generates $40 extra profitand every $100 decrease in revenue results in $40 extra loss. Thecosts consist of fixed cost , variable costs which are linearrelated to the revenue. 1-calculate the fix cost 2-calcualte thevariable cost at revenue of $1,500,000 a year. The company decidesto purchase another machine, which results in an increase ofcapacity to 4,000,000 a year. The fixed cost of this expansion is200,000 a year, and the variable costs are 40$ for 100% revenue.The normal revenues is 4,000,000 a year, and the actual revenues isalso $4,000,000. 3- calculate the breakeven point after theexpansion. 4- calculate the full cost per dollar revenue after theexpansion

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From the breakeven point every 100 extra revenue generates 40 extra profit this statement meanings is that the company had a contribution margin See Answer

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A company has the capacity to generate a revenue of $3,000,000 ayear. The break even revenue is $2,000,000 a year. From thebreakeven point every $100 extra revenue generates $40 extra profitand every $100 decrease in revenue results in $40 extra loss. Thecosts consist of fixed cost , variable costs which are linearrelated to the revenue. 1-calculate the fix cost 2-calcualte thevariable cost at revenue of $1,500,000 a year. The company decidesto purchase another machine, which results in an increase ofcapacity to 4,000,000 a year. The fixed cost of this expansion is200,000 a year, and the variable costs are 40$ for 100% revenue.The normal revenues is 4,000,000 a year, and the actual revenues isalso $4,000,000. 3- calculate the breakeven point after theexpansion. 4- calculate the full cost per dollar revenue after theexpansion