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chapter1

Exercise1

  • The Willow Furniture Company produces tables. The fixed monthly cost of production is $8,000, and the variable cost per table is $65. The tables sell for $180 apiece.
  • For a monthly volume of 300 tables, determine the total cost, total revenue, and profit.

Exercise1

  • The Willow Furniture Company produces tables. The fixed monthly cost of production is $8,000, and the variable cost per table is $65. The tables sell for $180 apiece.
  • For a monthly volume of 300 tables, determine the total cost, total revenue, and profit.
  • Answer:
  • Fixed cost (cf) = $8,000
  • Total variable cost (vcv ) = (300)*(65) = $19,500
  • Total cost = $8,000 + $19,500 = $27,500
  • Total revenue (vp) = (300)*(180) = $54,000
  • Profit = $54,000 - $27,500 = $26,500

Exercise1

  • b. Determine the monthly break-even volume for the Willow Furniture Company.

Exercise1

Exercise2

  • Evergreen Fertilizer Company produces fertilizer. The company's fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for $0.40 per pound. Determine the monthly break-even volume for the company.

Exercise2

  • Evergreen Fertilizer Company produces fertilizer. The company's fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for $0.40 per pound. Determine the monthly break-even volume for the company.
  • Evergreen must produce 100,000 lb per month to break even

Exercise3

  • Graphically illustrate the break-even volume for the Evergreen Fertilizer Company determined in Exercise2

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