a local energy drink distributor has fixed costs of $100,000 per year. it sells a case of its drinks for $15. it has varible costs of $8 per case
A. find the breakeven point in terms of cases per year for the company.
for this part I got
15=100000+8x
(100000/(15-8))= 14285.7
b. what total profit if distributor seels 20,000 cases at $18 per case?
I couldn't complete this part, but I tried and that's how far I got
(15*20000)+(8*80000)=460000
(18*20000)+(8*20000)=520000
520000-460000=60000
then what?
A. find the breakeven point in terms of cases per year for the company.
for this part I got
15=100000+8x
(100000/(15-8))= 14285.7
b. what total profit if distributor seels 20,000 cases at $18 per case?
I couldn't complete this part, but I tried and that's how far I got
(15*20000)+(8*80000)=460000
(18*20000)+(8*20000)=520000
520000-460000=60000
then what?
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It is easier to simply this.
A case is sold for $15. The cost to produce that case is $8. The gross margin is therefore $7 per case. [$15 minus $8]
If the fixed cost is $100,000, then the break even point is the $100,000 divided by $7
14,286 is correct but you did it the hard way.
20,000 cases at $18 per case means gross revenue of 20,000 x 18 = $360,000
The 20,000 cases cost $8 each in variable cost for $160,000 in variable cost. The overhead fixed cost is $100,000.
Therefore the total cost of production is $260,000 and profit is $360,000-$260,000=$100,000
It is easier to read the question and try to simplify it, then just apply formulas from a book.
A case is sold for $15. The cost to produce that case is $8. The gross margin is therefore $7 per case. [$15 minus $8]
If the fixed cost is $100,000, then the break even point is the $100,000 divided by $7
14,286 is correct but you did it the hard way.
20,000 cases at $18 per case means gross revenue of 20,000 x 18 = $360,000
The 20,000 cases cost $8 each in variable cost for $160,000 in variable cost. The overhead fixed cost is $100,000.
Therefore the total cost of production is $260,000 and profit is $360,000-$260,000=$100,000
It is easier to read the question and try to simplify it, then just apply formulas from a book.
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You got the answer to the first part right.
For the second part:
your revenue= 20000(18) = 360000 <======Revenue
your cost = 100000+[8*(20000)]
= 100000+160000
= 260000 <==========Cost
Revenue - cost = profit
360000 = 260000 = 100000
For the second part:
your revenue= 20000(18) = 360000 <======Revenue
your cost = 100000+[8*(20000)]
= 100000+160000
= 260000 <==========Cost
Revenue - cost = profit
360000 = 260000 = 100000
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C(x) = 100,000 + 8x
R(x) = 15x
a) Break even
15x = 100,00+8x
7x = 100,000
x = 14,286 cases
b) R(x) = 18x = $360,000
C = 100,000 + 8*20,000 = 260,000
Profit = R-C = $100,000
R(x) = 15x
a) Break even
15x = 100,00+8x
7x = 100,000
x = 14,286 cases
b) R(x) = 18x = $360,000
C = 100,000 + 8*20,000 = 260,000
Profit = R-C = $100,000