Question 4:
The 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 breakeven volume for the
company.
Break Even Volume = Fixed cost / (Selling price per pound – Variable cost per
pound)
= 25000/(0.400.15)= 100,000 Pounds
Question 12:
If the Evergreen Fertilizer Company in problem 4 changes the price of its fertilizer from
$0.40 per pound to $0.60 per pound, what effect will the change have on the breakeven
volume?
Break Even Volume = Fixed cost / (Selling price per pound – Variable cost per
pound)
= 25000/(0.600.15)= 55,555.56 Pounds
The break even volume will reduce.
Question 18:
The General Store at State University is an auxiliary bookstore located near the
dormitories sells academic supplies, toiletries, sweatshirts and Tshirts, magazines,
packaged food items, canned soft drinks and fruit drinks. The manager of the store has
noticed that several pizza deli services near campus make frequent deliveries. As such,
the manager is considering selling pi the store. She could buy premade frozen pizzas
and heat them in an oven. The cost of the oven freezer would be $27,000. The frozen
pizzas cost $3.75 each to buy from a distributor and to pare (including labor and a box).
To be competitive with the local delivery services, the man: believes she should sell the
pizzas for $8.95 apiece. The manager needs to write up a propos the university's director
of auxiliary services.
a.
Determine how many pizzas would have to be sold to break even.
Break Even Volume = Fixed cost / (Selling price – Variable cost)
=27000/(8.953.75) =5192.31 Pizzas
b.
If the General Store sells 20 pizzas per day, how many days would it take to
break even?
No. of days =5192.31/20 = 259.62 days
c. The manager of the store anticipates that once the local pizza delivery services start
losing business they will react by cutting prices. If after a month (30 days) the manager
has to lower the price of a pizza to $7.95 to keep demand at 20 pizzas per day, as she
expects, what will the new breakeven point be, and how long will it take the store to
break even?
Number of Pizzas sold in first 30 days = 30*20=600
Contribution per pizza for the first 30 days = (8.953.75) =$5.20
Total Contribution during first 30 days = 600*5.20=$3120
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View Full DocumentRemaining fixed cost to be recovered = 270003120 = $23880
Break Even Volume for remaining fixed cost = Fixed cost / (Selling price – Variable
cost)
=23880/(7.953.75) =5685.71 Pizzas
Number of days = 5685.71/20=284.29
So it will take a total of 30+284.29 days i.e. 314.29 days to fully break even.
Question 20:
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 Spring '10
 AZAD
 Minimax, Infogap decision theory, payoﬀ, maximum payoff

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