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Assessment: Explanation: If Willow Furniture Company Produces and Sells 69.57 Tables in A Month

The document contains two word problems about calculating costs, revenues, profits, and breakeven volumes for different companies. For the first company, Willow Furniture, producing 300 tables in a month would result in a total cost of $27,500, total revenue of $54,000 and a profit of $26,500. The breakeven monthly volume for Willow Furniture is 69.57 tables. For Rolling Creek Textiles, producing 18,000 yards of denim in a month would give them a specific total cost, revenue and profit. To calculate their annual breakeven volume, the formula for breakeven is applied.

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481 views1 page

Assessment: Explanation: If Willow Furniture Company Produces and Sells 69.57 Tables in A Month

The document contains two word problems about calculating costs, revenues, profits, and breakeven volumes for different companies. For the first company, Willow Furniture, producing 300 tables in a month would result in a total cost of $27,500, total revenue of $54,000 and a profit of $26,500. The breakeven monthly volume for Willow Furniture is 69.57 tables. For Rolling Creek Textiles, producing 18,000 yards of denim in a month would give them a specific total cost, revenue and profit. To calculate their annual breakeven volume, the formula for breakeven is applied.

Uploaded by

beyy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Assessment

Problem Solving
1. The Willow Furniture Company produces tables. The fixed monthly cost of
production: $8,000. Variable cost/table: $65.00. Table sells for $180.00/piece.

Required: 1.a. Determine total cost, total revenue and profit for a monthly volume
of 300 tables.
1.b. Find the monthly breakeven volume for the Willow Furniture
Company.

2. Rolling Creek Textile Mill produces denims. Fixed monthly cost: $21,000,
Variable cost/yard/denim: $0.45, The mill sells a yard of denim: $1.30

Required: 2.a. For a monthly volume of 18,000 yards of denim, determine the total
cost, total revenue and profit.
2.b. Determine the annual breakeven volume for the Rolling Creek
Textile Mill.

Answers
1. Given:
Fixed Cost (monthly) = $8,000
Variable Cost = $65.00/table
Selling Price = $180.00/piece

1.a. Total cost = total fixed costs + total variable cost


Total Cost = 8,000 + [(65)(300)]
Total Cost = $27,500

Total revenue = (Selling Price)(Volume)


Total revenue = (180)(300)
Total revenue = $54,000

Total profit = total revenue – total cost


Total profit = 54,000 – 27,500
Total Profit = $26,500

1.b. Z = vp-Cf-Vcv
0 = v(180) – 8,000 – v(65)
0 = 180v – 8,000 – 65v
115v = 8,000
v = 69.57 tables

Explanation: If Willow Furniture Company produces and sells 69.57 tables in a month,
the profit and loss will be zero and the company will breakeven.

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