Ch.5_CVPExercise_Solution

Ch.5_CVPExercise_Solution - CM = (Profit + FC) / volume...

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Chapter 5 In-class Exercise Solution Assumptions: Reimbursement per scan $1,500 Scanner A Fixed costs $1,000,000 Profit @ 5000 scans $500,000 Scanner B Fixed costs $800,000 Profit @ 5000 scans $450,000 PART 1: Breakeven volume Solve for CM per unit Profit = (price * volume) - (VC rate * volume) - FC Scanner A 300 Profit = (price - VC rate) * volume - FC Scanner B 250 Profit = (CM * volume) - FC
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Unformatted text preview: CM = (Profit + FC) / volume Solve for breakeven volume Scanner A 3,333 BE volume = FC / CM Scanner B 3,200 PART 2: Volume at which scanners are equally profitable 4,000 (CMa * volume) - FCa = (CMb * volume) - FCb (CMa * volume) - (CMb*volume) = FCa - FCb (CMa - CMb) * volume = FCa - FCb volume = (FCa - FCb) / (CMa-CMb)...
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