Table of Contents
Selling Price : $ 11 per shaver.
Variable Cost per shaver = $ 3
Fixed Cost = $ 100000
In order to break even,
R(X) – C(X) should be equal to zero.
Hence, the equation would be = (11x – 3x – 100000) should be equal to zero.
Solving for X, we get 12,500 units.
If the company sells 15000 units, then it is higher than the break even point of 12,500 units. This would result in a profit.
Hence, Profit = ((11*15000) – (3*15000) – 100000) = $ 20000
Jenny receives $ 8/hour plus 4% sales commission
Masur receives $ 10/hour plus 8% sales commission in excess of $1000.
Both of them work 8-hour days.
We assume X to be the sales amount for which they both earn the same daily amounts.
Hence the equation would be ((8*8) + 0.04X) – ((8*10) + (0.08(X – 1000))) = 0
Solving for X we would get sales of $ 1600 which would be required for both Jenny and Masur to earn the same amount ($ 128)
Charges for Plan I are $ 12/day and $ 0.12/mile.
Charges for Plan II are $ 30/day and no charges for miles.
If 300 miles were to be driven, then the costs for the respective plans would be :
Plan I : $ (12 + (0.12*300)) = $ 48
Plan II : $ 30
Hence, Plan II would be better.
We assume X to be the mileage for which both rates the same. The mileage at which both rates would be equal can be showcased by way of the following equation:
(12 + 0.12X) – 30 = 0
Solving for X, we would get 150.
Hence at 150 miles, the costs for both plans would be the same.
Fixed Cost : $ 35,000
Variable Cost : $ 70/racket
Selling Price : $ 90/racket
Number of Units = 2,500
Hence, Profit = ((2500 * 90) – (70 * 2500) – 35000) = $ 15000.
R = 225X
C = 75X + 600
For Breakeven, R – C should be equal to 0.
225 X – (75X + 600) = 0
Solving for X, we get 4.
Hence on selling 4 items, the company will break even.