Answer:
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Explanation:
The basic theory illustrated in (Figure) is that, because of the existence of fixed costs in most production processes, in the first stages of production and subsequent sale of the products, the company will realize a loss. For example, assume that in an extreme case the company has fixed costs of ?20,000, a sales price of ?400 per unit and variable costs of ?250 per unit, and it sells no units. It would realize a loss of ?20,000 (the fixed costs) since it recognized no revenue or variable costs. This loss explains why the company’s cost graph recognized costs (in this example, ?20,000) even though there were no sales. If it subsequently sells units, the loss would be reduced by ?150 (the contribution margin) for each unit sold. This relationship will be continued until we reach the break-even point, where total revenue equals total costs. Once we reach the break-even point for each unit sold the company will realize an increase in profits of ?150.
For each additional unit sold, the loss typically is lessened until it reaches the break-even point. At this stage, the company is theoretically realizing neither a profit nor a loss. After the next sale beyond the break-even point, the company will begin to make a profit, and the profit will continue to increase as more units are sold. While there are exceptions and complications that could be incorporated, these are the general guidelines for break-even analysis.
As you can imagine, the concept of the break-even point applies to every business endeavor—manufacturing, retail, and service. Because of its universal applicability, it is a critical concept to managers, business owners, and accountants. When a company first starts out, it is important for the owners to know when their sales will be sufficient
Answer:
the fixed costs for Rackit Corporation is $161,500.
Explanation:
Cash Flow DOL = 1 + Fixed Cost / EBITDA
2.7 = 1 + Fixed Cost / 95,000
1.7 = Fixed Cost / 95,000
Fixed Cost = $161,500
Therefore, the fixed costs for Rackit Corporation is $161,500.
Answer:
d. the total benefit he gets from purchasing four pairs of gloves minus the total benefit he gets from purchasing three pairs of gloves.
Explanation:
Marginal benefits refer to the additional gains obtained by the sales, purchase, or manufacture of an extra unit. It the advantage associated with buying or selling one more unit. Marginal benefit is compared with the marginal cost to determine if continuous production is profitable.
Since marginal benefits are associated with an extra item, obtaining the value of the additional items must exclude the previous units. In this case, getting the marginal benefit of the fourth item can be calculated by adding up the gains of all the four gloves then subtracting the gains of the first three.
Answer:
$ 363,880
Explanation:
The seller must cover the mortgage, closing costs, and brokerage fee. Once these expenses are covered, the down payment is added. This adds the minimum amount for the house price.
Mortgage 290,000
Closing costs 1,400
Brokerage fee <u> 17,400</u> (6% * 290,000)
<h3>Total Expenses 308,800</h3>
Down payment <u> 55,000</u>
<h3><u>Minimun price</u> 363,880</h3>
Answer:
Results are below.
Explanation:
Giving the following information:
Radison Enterprises sells a product for $102 per unit.
The variable cost is $58 per unit, while fixed costs are $758,912.
<u>To calculate the break-even point in units, we need to use the following formula:</u>
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 758,912 / (102 - 58)
Break-even point in units= 17,248 units
<u>Now, the selling price is $107:</u>
Break-even point in units= 758,912 / (107 - 58)
Break-even point in units= 15,488 units
