CH07_f

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: profit of the sales? c. How many chairs must the company sell to generate a total of $5,000 net profits? VC $20 FC $10,000 P $25 a. TC = (20 x 150) + 10,000 = 13,000 b. R = 25 x 150 = 3,750 P = 3,750 - 13,000 = (9,250) LOSS c. Q = (5,000 + 10,000) / (25 - 20) = 15,000 / 5 = 3,000 chairs 3. Break-even analysis: - The process to determine the production and sales for a zero profit - Break-even quantity in units = fixed costs/(price – variable cost per unit) - Price = (fixed costs/quantity) + variable cost per unit - Example: 7.2 A cinema sells tickets for $5 per person. Each person buys on average $10 of food and drinks. The cost of providing the service is estimated $3 per person. The fixed cost of renting the movie is $2,000. How many tickets must be sold to 1) Break-even; 2) have a profit of $10,000, and assume 10% income tax? Pt $5 Pf $10 VC $3 FC $2,000 1. Q= 2,000 / (15 - 3) = 167 tickets 2. 10,000 = (15x - 3x - 2...
View Full Document

This document was uploaded on 02/03/2014.

Ask a homework question - tutors are online