Ch.7_Solution_Manual_Ed.1_v5_

# Ch.7_Solution_Manual_Ed.1_v5_ - Exercises 7.1 Complete the...

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Unformatted text preview: Exercises 7.1 Complete the missing values for break-even volume calculations in problems 1 and 2 below: Exercise 7.1, Solution 1: # Fixed Cost ( FC ) per month Variable cost ( VC ) per unit Selling Price ( S ) per unit Break-even volume (x) per month Total Variable Cost ( TVC ) Per month Total Revenue ( TR ) per month ( TR = TC at break-even) a. \$1000 \$3 \$13 100 \$300 \$1300 b. \$8000 \$70 \$110 200 \$14,000 \$22,000 c. \$5890 \$61 \$156 62 \$3782 \$9672 d. \$2300 \$45 \$91 50 \$2250 \$4550 e. \$4250 \$58 \$75 250 \$14,500 \$18,750 f. \$8500 \$300 \$317 500 \$150,000 \$158,500 a: FC = \$1000, VC = \$3, S = \$13, x =?, TVC = ?, TR = ? TR = S x = 13 x TC = FC + TVC = 1000 + 3 x At break-even TR = TC Therefore 13 x = 1000 + 3 x 10 x = 1000 x = 100 units TVC = VC x = 3 100 = \$300.00 At break-even, TR = 13 x = 13 100 = \$1300.00 b. FC = \$8000, S = \$110, x = 200, VC = ?, TVC = ?, TR = ? TR = S x = 110 200 = \$22,000.00 TC = FC + TVC = 8000 + VC 200 = 8000 + 200 VC At break-even, TR = TC Therefore, 22,000 = 8000 + 200 VC 200 VC = 14,000 VC = \$70.00 TVC = VC x = 70 200 = \$14,000.00 c. FC = \$5890, S = \$156, x = 62 TR = S x = 156 62 = \$9672.00 TC = FC + TVC = 5890 + VC 62 = 5890 + 62 VC At break-even, TR = TC Therefore, 9672 = 5890 + 62 VC 62 VC = 3782 VC = \$61.00 TVC = VC x = 61 62 = \$3782.00 d. VC = \$45, S = \$91, x = 50 TR = S x = 91 50 = \$4550.00 TVC = VC x = 45 50 = \$2250.00 At break-even, TR = TC Therefore, at break-even, TC = \$4550.00 TC = FC + TVC Therefore, FC = TC – TVC = 4550 – 2250 = \$2300.00 e. FC = \$4250, S = \$75, TR = \$18,750 TR = S x = 75 x = 18,750 Therefore, x = 250 At break-even, TC = TR Therefore, TC = \$18,750 at break even But TC = FC + TVC = FC + VC x 18,750 = 4250 + VC 250 250 VC = 14,500 Therefore, VC = \$58.00 TVC = VC 250 = \$14,500.00 f. VC = \$300, TVC = \$150,000, TR = \$158,500 TVC = VC x 150,000 = 300 x Therefore, x = 500 TR = S x 158,500 = S 500 Therefore, S = \$317.00 2 At break-even, TC = TR Therefore, TC = \$158,500.00 at break-even But TC = FC + TVC 158,500 = FC + 150,000 Therefore, FC = \$8500.00 Exercise 7.1, Solution 2: # Fixed Cost ( FC ) per month Variable cost ( VC ) per unit Selling Price ( S ) per unit Break-even volume (x) per month Total Variable Cost ( TVC ) Per month Total Revenue ( TR ) per month ( TR = TC at break-even) a. \$8400 \$25 \$36 764 \$19,100 \$27,504 b. \$25,000 \$450 \$475 1000 \$450,000 \$475,000 c. \$720 \$38 \$74 20 \$760 \$1480 d. \$8000 \$30 \$50 400 \$12,000 \$20,000 e. \$7800 \$111 \$150 200 \$22,200 \$30,000 f. \$24,500 \$120 \$155 700 \$84,000 \$108,500 a. FC = \$8400, VC = \$25, S = \$36, x =?, TVC = ?, TR = ? TR = S x = 36 x TC = FC + TVC = 8400 + 25 x At break-even TR = TC Therefore 36x = 8400 + 25 x 11 x = 8400 x = 763.636363... = 764 units TVC = VC x = 25 764 = \$19,100.00 At break-even, TR = 36 x = 36 764 = \$27,504.00 b....
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Ch.7_Solution_Manual_Ed.1_v5_ - Exercises 7.1 Complete the...

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