Break Even Analysis

# Break Even Analysis - Break-Even Analysis 1 Engineering...

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Break-Even Analysis 1. Engineering estimates indicate the variable cost of manufacturing a new product will be \$35 per unit. Based on market research, the selling price of the product is to be \$120 per unit and variable selling expense is expected to be \$15 per unit. The fixed costs applicable to the new product are estimated to be \$2800 per period and capacity per period is 100 units. Assuming that each part is independent of the one that precedes it, determine (a) the income at a volume of 70 units; (b) the net income at a volume of 30% of capacity; (c) the net income at a sales volume of \$10,200; (d) the level of operations as a percent of capacity to generate a net income of \$2240; (e) the number of units that must be sold to make a net income of \$1050; (f) the sales volume in dollars to suffer a loss of no more that \$350; (g) the break-even point in units if fixed costs are increased to \$3150; (h) the break-even point as a percent of capacity if fixed costs are reduced by \$160 and the variable cost of manufacturing is increased to \$39 per unit; (i) the break-even point in dollars if the selling price is reduced to \$100 per unit. 2. The following data pertains to the operating budget of Matt Manufacturing. Sales \$720,000 Less: Fixed costs \$220,000 Gross Profit \$500,000 Less: Variable costs 324,000 Net Income \$176,000 Capacity is a sales volume of \$800,000 per period. Determine: (a) the net income at 85% capacity; (b) the net income at 30% of capacity; (c) the level of operations as a percent of capacity to realize a net income of \$66,000; (d) the level of operations in dollars to sustain a loss of no more than \$6600; (e) the break-even point in dollars if fixed costs are increased by 15%; (f) the break-even point as a percent of capacity if fixed costs are decreased by \$18,400 and variable costs are increased to 52% of sales.

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3. The lighting division of Universal Electric Company plans to introduce a new streetlight based on the following accounting information. Fixed costs per period are \$3136; variable cost per unit is \$157; selling
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## This note was uploaded on 08/22/2009 for the course MATH 1101 taught by Professor Tonycirusolo during the Fall '05 term at Niagara College.

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Break Even Analysis - Break-Even Analysis 1 Engineering...

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