sheet lec1 sol
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Chapter OneSOLUTIONS
1a.
2a.
3a.
4.
5.
b.
b.
b.
250
200
150
100
50
01,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
Volume, (v)
Break-even pointTotalRevenue
TotalCost
cf
Rev
enue
, cos
t,an
d pr
ofit
($1,
000s
)
6.
150
125
100
75
50
25
0
Volume, ($1,000s)
Break-even point
TotalRevenue
TotalCost
cf
(lbs.
)
25 50 75 100 125 150 175 200
16.
The increase in fixed cost from $25,000 to$35,000 will increase the break-even point from1,250 to 1,750 or 500 dolls, thus, he should notspend the extra $10,000 for advertising.
17. Original break-even point (from problem) 7 = 1,250New break-even point:
Reduces BE point by 187.5 dolls.
vc
p cf
v=
−=
−=17 000
30 141062 5
,.
vc
p cf
v=
−=
−=35 000
30 101 750
,,
8.
9.
10.
11.
12.
13.
14.
15.
7. vc
p cf
v=
−=
−=$ ,
,25 000
30 101 250 dolls
18. = 24 19. = 175 20. = 6.50