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Need help filling in the blanks.. (comparing depreciation methods.)

Need help filling in the blanks.. (comparing depreciation methods.)-example-1
User Arturwwl
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1 Answer

3 votes

Answer:

Refer to step-by-step.

Explanation:

Fixed Cost Per Deck = Total Fixed Cost/Estimated Deck Sales

Fixed Cost Per Deck = 85000/13000

Fixed Cost Per Deck = $7.08

Break Even Point in Units = Fixed Costs/ Sales Price per Unit - Variable Cost

Break Even Point in Units = 85000/11.95 - 3

Break Even Point in Units = 9497

Fixed Cost Per Deck = Total Fixed Cost/Estimated Deck Sales

Fixed Cost Per Deck = 85000/10000

Fixed Cost Per Deck = $8.50

Break Even Point in Units = Fixed Costs/ Sales Price per Unit - Variable Cost

Break Even Point in Units = 85000/12.95 - 3

Break Even Point in Units = 8543

Break Even Point in Units = Fixed Costs/ Sales Price per Unit - Variable Cost

Break Even Point in Units = 85000/13.45 - 3

Break Even Point in Units = 8134

1.Total Cost = Variable Cost/unit x Units Produced + Fixed cost

Total Cost = (3 x 13000) + 85000

Total Cost = 39000 + 85000

Total Cost = $124000

2.Total Cost = Variable Cost/unit x Units Produced + Fixed cost

Total Cost = (3 x 10000) + 85000

Total Cost = 30000 + 85000

Total Cost = $115000

3. $12.95 and $13.45.

Because the total cost is greater than the revenue.

Let's try at $12.95:

Revenue = 12.95 x 8000

Revenue = $103600

Total Cost = (3 x 8000) + 85000

Total Cost = 24000 + 85000

Total Cost = $109000

Profit = Revenue - Total Cost

Profit = 103600 - 109000

Profit = $-5400

Now at $13.45:

Revenue = 13.45 x 7000

Revenue = $94150

Total Cost = (3 x 7000) + 85000

Total Cost = 21000 + 85000

Total Cost = $106000

Profit = Revenue - Total Cost

Profit = 94150 - 106000

Profit = $-11850

4. The fixed costs to produce $13.45 decks is so much greater than the fixed costs to produce 10.95 due to the estimated deck sales.

User Zaksoup
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