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A Company manufactures and sells one product
A Company manufactures and sells one product. The product has the following cost and revenue data: 70 Selling price Per Unit (AED) Variable cost Per Unit (AED) 30 Total fixed expenses per month are as follows: Expenses types AED Advertising 453,053 Rent 100,000 Heating 100,000 The company produced and sold 10,000 units during the month and had no beginning or ending inventories. a. What is the break-even value in Dirhams?
QUESTION 2 A Company manufactures and sells one product. The product has the following cost and revenue data 76 Selling price Per Unit (AED) Variable cost Per Unit (AED) 30 Total fixed expenses per month are as follows: AED Expenses types Advertising Rent 306,998 100,000 Heating 100,000 The company produced and sold 10,000 units during the month and had no beginning or ending inventories. a. How many units would the company have to sell to have a profit of AED 120,000?
QUESTION 3 A Company manufactures and sells one product. The product has the following cost and revenue data: 84 Selling price Per Unit (AED) Variable cost Per Unit (AED) 38 Total fixed expenses per month are as follows: Expenses types AED Advertising 200,000 Rent 100,000 Heating 100,000 The company produced and sold 10,000 units during the month and had no beginning or ending inventories. a. If the sales increase by 200 units, by how much well the net operating income (profit) increase? Click Save and Submit to save and submit. Click Save All Answers to save all answers.
Expert Solution
1.Break even occurs when total revenue = total cost
Selling price = 70
Variable cost = 30
Total fixed cost = 453,053 + 100,000 + 100,000 = 653,053
Total cost = Total fixed cost + Total variable cost = 653,053 + 30X
Total revenue from selling X units is 70X
Break even occurs when 70X = 653,053 + 30X
40X = 653,053
X = 16,326.325
At X = 16,326.325, break even is 1,142,842.75
2) Price per unit = 76
Variable cost = 30
Fixed cost = 306,998 +100,000 + 100,000 = 506,998
Total cost = 506,998 + 30X
To earn a profit of 120,000
Profit = Total Revenue - Total Cost
120,000 = 76X - 506,998 - 30X
X = 13,630.39
3) Price per unit = 84
Variable cost = 38
Fixed cost = 200,000 +100,000 + 100,000 = 400,000
Total cost = 400,000 + 38X
If units sold are 10,000
Profit = 84 * 10,000 - 400,000 - 38 * 10,000 = 60,000
If units sold increases by 200
Profit = 84 * 10,200 - 400,000 - 38 * 10,200 = 69,200
Profit rises by = 69,200 - 60,000 = 9,200
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