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Unformatted text preview: Exercises 7.1 Complete the missing values for breakeven 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 Breakeven volume (x) per month Total Variable Cost ( TVC ) Per month Total Revenue ( TR ) per month ( TR = TC at breakeven) 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 breakeven TR = TC Therefore 13 x = 1000 + 3 x 10 x = 1000 x = 100 units TVC = VC x = 3 100 = $300.00 At breakeven, 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 breakeven, 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 breakeven, 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 breakeven, TR = TC Therefore, at breakeven, 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 breakeven, 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 breakeven, TC = TR Therefore, TC = $158,500.00 at breakeven 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 Breakeven volume (x) per month Total Variable Cost ( TVC ) Per month Total Revenue ( TR ) per month ( TR = TC at breakeven) 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 breakeven TR = TC Therefore 36x = 8400 + 25 x 11 x = 8400 x = 763.636363... = 764 units TVC = VC x = 25 764 = $19,100.00 At breakeven, TR = 36 x = 36 764 = $27,504.00 b....
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