The document provides 5 sample problems for calculating breakeven points. The first problem calculates that the breakeven point is 295,490 units. The second problem determines that the length of cable to make installation costs the same is 1,000 feet. The third problem finds that producing 200 units per month would result in a profit of P121,666.67. The fourth problem calculates that the multiple punch machine would pay for itself after 9,601 rivet holes. The fifth problem finds that the breakeven sales volume is P25,011 when accounting for 10% defective units.
The document provides 5 sample problems for calculating breakeven points. The first problem calculates that the breakeven point is 295,490 units. The second problem determines that the length of cable to make installation costs the same is 1,000 feet. The third problem finds that producing 200 units per month would result in a profit of P121,666.67. The fourth problem calculates that the multiple punch machine would pay for itself after 9,601 rivet holes. The fifth problem finds that the breakeven sales volume is P25,011 when accounting for 10% defective units.
The document provides 5 sample problems for calculating breakeven points. The first problem calculates that the breakeven point is 295,490 units. The second problem determines that the length of cable to make installation costs the same is 1,000 feet. The third problem finds that producing 200 units per month would result in a profit of P121,666.67. The fourth problem calculates that the multiple punch machine would pay for itself after 9,601 rivet holes. The fifth problem finds that the breakeven sales volume is P25,011 when accounting for 10% defective units.
The document provides 5 sample problems for calculating breakeven points. The first problem calculates that the breakeven point is 295,490 units. The second problem determines that the length of cable to make installation costs the same is 1,000 feet. The third problem finds that producing 200 units per month would result in a profit of P121,666.67. The fourth problem calculates that the multiple punch machine would pay for itself after 9,601 rivet holes. The fifth problem finds that the breakeven sales volume is P25,011 when accounting for 10% defective units.
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BREAKEVEN ANALYSIS (SAMPLE PROBLEMS)
1. A factory engaged in the fabrication of an automobile part with a production capacity of 700,000 units per year is only operating at 62% of capacity due to unavailability of the necessary foreign currency to finance the importation of their raw materials. The annual income is P430,000.00. Annual fixed costs are P 190,00.00 and variable costs are P 0.348 per unit. What is the breakeven point? Solution: Let x = number of units to breakeven Solving for the expenses: Variable cost = 0.348x Fixed cost = 190,000
0.348 Total expenses = ( )(434,000 units) + 190,000 unit Total Expenses = 341, 032
Total income = 430,000
430,000 Selling Price = = 0.991 per unit 434,000
Total income = 0.99x
To breakeven: Income = Expenses 0.991x = 0.348x + 190,000 0.643x = 190,000 x = 295,490
∴The current breakeven point is 295, 490
2. A telephone switchboard 100 pair cable can be made up with either enameled wire or tinned wire. There will be 400 soldered connections. The cost of soldering a connection on the enameled wire will be P 1.65, on the tinned wire, it will be P 1.15. A 100-pair cable made up with enameled wire cost P 0.55 per linear foot and those made up of tinned wire cost P 0.75 per linear foot. Determine the length of cable run in feet so that the cost of each installation would be the same. Solution: For enameled wire: Let x = length of wire Cost of wire = 0.55x Cost of soldering = 1.65(400) = 660
Total cost = 0.55x + 660
For tinned wire:
Let x = length of wire
Cost of wire = 0.75x
Cost of soldering = 1.15(400) = 460
Total cost = 0.75x + 60
In order to get the length of wire that will give the same cost, equate total cost of enameled wire and total cost of tinned wire.
0.55x + 660 = 0.75x + 660
0.2x = 2000 x = 1, 000
∴The length of cable to make cost installation the same is 1,000 feet. 3. A local factory assembling calculators produces 400 units per month and sells them at P 1, 800 each. Dividends are 8% on the 8,000 shares with par value of P 250 each. The fixed operating cost per month is P 1,000 per unit. If 200 units were produced per month, determine the profit or loss.
Solution:
Let x = number of calculators produced per month to break-even
4. In steel fabrication shop located somewhere in Cebu, various size rivet holes must be made in structural members. This may be done by laying out the position of the hole on the members and using a drill press for this method, a machinist wage rate is P 20.25 per hour and he can drill 27 holes per hour. An alternative method is by the use of the multiple punch machine. In this process, the machinist wage rate is P 20.00 per hour and he can complete 8 holes per minute. This method requires P 0.50 per holes to set multiple punch machine and an installation cost of P 2,000.00. If all other costs are the same, for what number of rivet holes will the multiple punch machine pay for itself?
Solution:
Using first method, the Drill Press:
20.25 Cost of machinist per hole = 27 Cost of machinist per hole = 0.75
Using the second method, the Multiple Punch Machine:
20 Cost of machinist per hole = 8(60) Cost of machinist per hole = 0.0417
Additional cost for setting up the machine per hole = 0.50
Additional cost = 2,000.00
Let n = number of rivets holes that will make the multiple punch machine pay for itself Total cost using drill press = total cost using multiple punch machine
∴The number of rivet holes for the multiple-punch machine to pay for itself is 9,601. 5. An item which can be sold for Php 63.00 per unit wholesale id being produced with the following cost data: Labor cost = P 10.00 per unit Material cost = P 15.00 per unit Fixed charges = P 10,000.00 Variable cost = P 8.00 per unit
What is the breakeven point sales volume if one out of every 10 units produced is defective and is rejected with only full recovery on materials?
Solution:
Let x = number of units produced per month to breakeven
