ch 11 solution - 1. a. The total variable cost per unit is...

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1. a. The total variable cost per unit is the sum of the two variable costs, so: Total variable costs per unit = $4.68 + 2.27 Total variable costs per unit = $6.95 b. The total costs include all variable costs and fixed costs. We need to make sure we are including all variable costs for the number of units produced, so: Total costs = Variable costs + Fixed costs Total costs = $6.95(320,000) + $650,000 Total costs = $2,874,000 c. The cash breakeven, that is the point where cash flow is zero, is: Q C = $650,000 / ($11.99 – 6.95) Q C = 128,968 units And the accounting breakeven is: Q A = ($650,000 + 190,000) / ($11.99 – 6.95) Q A = 166,667 units 3. The base-case, best-case, and worst-case values are shown below. Remember that in the best-case, sales and price increase, while costs decrease. In the worst-case, sales and price decrease, and costs increase. Unit Scenario Unit Sales Unit Price Variable Cost Fixed Costs Base 110,000 $1,600.00 $180.00 $5,500,000 Best 126,500 $1,840.00
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This note was uploaded on 02/23/2010 for the course FIN 81341 taught by Professor Yang during the Spring '10 term at CSU San Bernardino.

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ch 11 solution - 1. a. The total variable cost per unit is...

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