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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?


$ 3,700,000

Total variable costs

$ 2,300,000

Total fixed costs

$ 1,100,000, including depreciation


$ 100,000

Answer $ 2,642,857


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

Variable cost per unit


Unit selling price per unit


Answer 0.50


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



Direct material


Direct labour


Manufacturing overhead


Administration overhead


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


Variable cost per unit


Total fixed costs


Answer $  10,000

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

Selling price per unit



Variable cost per unit



Total fixed costs



Profit objective



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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