Here are some exercises of Break-even topic!Enjoy it......^^
1)Easyyy one!
Selling price=4 pounds
Variable cost=2.50 pound
Fixed cost=1500 pounds
Volume=3000 units
Calculate:
a>B/E
b>Profit
Answer:
a>B/E= 1000 units
b>Profit=3000 pounds
2)Easyyy one too!
Selling price=6 pounds
Var.Cost=4.5 pounds
F.cost=30000 pounds
Volume=25000 units
Calculate:
a>B/E
b>Profit
Answer:
a>B/E=20000 units
b>Profit=7500 pounds
3)Normal!
Sales price=1.20 pounds
Var.Cost=0.45 pounds
F.cost=8500 pounds
Volume= 12000 units
Calculate:
a>B/E
b>Profit
Answer:
a>B/E=~11333 units
b>Profit=500 pounds
4)A little bit hard one:
Selling price=20 pounds
Var.Cost=15 pounds
F.cost=5000 pounds
Output=1500 units
Capacity=2000 units
We offered a new order for 700 units at a price of 17 pounds.To meet this order we will need extra machinery=1000 pounds.Should we accept?
Answer:Yes(not sure,)^^
[To solve this problem,you need to calculate an old profit and total cost,compare with a new profit and total cost,and MR.CHRIS after that how could we know SHOULD WE ACCEPT OR NOT???!!!
Current ratio
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The current ratio is a financial ratio that shows the proportion of current
assets to current liabilities. The current ratio is used as an indicator of
a c...
6 years ago
3 comments:
Calculate the contribution of the new order. Subtract from that the extra fixed cost. If the answer is positive then take the order ... BUT you need to consider many other factors:
a. economies of scale
b. are you now at full capacity
c. will existing customers find out the new price
d. if you don't take the order will someone else?
etc
So I think this one is extremely hard to answer....coz we must consider too many other factors!Right??...So is it right that in that question we should accept??
It depends...
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