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Finance Questions

  • From Mathematics, General Mathematics
  • Due on 13 Jun, 2018 12:00:00
  • Asked On 14 Jun, 2018 02:04:24
  • Due date has already passed, but you can still post solutions.
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12. Given the following information, what is the company’s cash break-even point?

Revenue

$ 3,700,000

Total variable costs

$ 2,300,000

Total fixed costs

$ 1,100,000, including depreciation

Depreciation

$ 100,000

Answer $ 2,642,857

 

14. Given the following information, what is the PV ratio?

Variable cost per unit

$100

Unit selling price per unit

$200

Answer 0.50

 

16. Given the following information, what is the contribution margin?

Revenue

$1,000,000

Direct material

500,000

Direct labour

250,000

Manufacturing overhead

150,000

Administration overhead

50,000

Answer $ 250,000

17. An entrepreneur is absolutely certain his new company will sell 10,000 units. He has already determined the break-even point is 3,000 units. Should he launch the company, and why or why not?

Launch the company because there is little risk since the break-even point is well below expected sales.

18. A company wants to make a $10,000 profit by selling 500 units, without changing the selling price. By how much should the fixed costs be reduced?

Selling price per unit

$300

Variable cost per unit

$100

Total fixed costs

$100,000

Answer $  10,000

19. Given the following information, what is the required number of units that must be sold?

Selling price per unit

$300

 

Variable cost per unit

$100

 

Total fixed costs

$100,000

 

Profit objective

$10,000

   

Answer 550 units

20. When is the profit break-even point achieved?  When the contribution margin covers all costs and the profit objective.

21. How is the contribution margin calculated?

by subtracting variable costs from revenue

 

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[Solved] solution to the questions

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  • Submitted On 14 Jun, 2018 09:34:34
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Question 12. The company’s cash break-even point Cash Break- Even Point (in sales) = Cash Fixed Cost/Cash Contribution ratio Cash fixed cost = total fixed cost - depreciation =$ 1,100,000 - $ 100,000 = $1,000,000 cash contribution margin ratio = (Revenues-variable costs)/Revenues = ($ 3,700,000-$2,300,000)/$3,700,000 = 0.378378378 Cash break-even point = $1,000,000/0.378378378 = $ 2,642,857.143 Therefore, the answer $ 2,642,857 ...
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