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Week 13 Tutorial Questions Solutions

# Week 13 Tutorial Questions Solutions - ACCT1501 2011S1 Week...

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ACCT1501 2011S1 Week 13 Tutorial Questions Solutions Tutorial Question: Ycube Ltd Case, Problem 16.16 Q1: YCube Limited YCube Ltd manufactures electronic games. In 2007, YCube sold 35,000 games at \$40 each. Total costs amounted to \$550,000, of which \$200,000 were considered fixed. In 2008 the company is considering replacing a part that costs \$3.00 with a better part costing \$4.50 per unit. It is estimated that all other variable costs per unit will be the same. The only increase in fixed costs would be caused by the installation of a new machine. This machine would cost \$20,000, and would have a useful life of 5 years and no salvage value. The company uses straight-line depreciation. 1. What was YCube Ltd’s break-even point in number of units in 2007? 2. How many units would the company have had to sell in 2007 to earn a profit of \$140,000? 3. If YCube holds the sales price constant and makes the suggested changes, how many units of product must be sold in 2008 to break even?

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Week 13 Tutorial Questions Solutions - ACCT1501 2011S1 Week...

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