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frozen [14]
2 years ago
8

Grand Gimmicks Company produces a single product with a current selling price of $170. Variable costs are $130 per unit, and fix

ed costs per month average $6,240. Management is considering increasing the selling price to $190 per unit. Assume that the cost of the product and monthly fixed expenses will not change as a result of the proposed increase in selling price. At the proposed increased selling price of $190 per unit, what dollar volume of sales per month is required to break-even? (Rounded)
Business
2 answers:
kobusy [5.1K]2 years ago
8 0

Answer:

Break Even Sales Volume in Dollars=  $ 19500

Explanation:

Break Even Sales Volume in Dollars= Fixed Costs/ Contribution Margin Ratio

Break Even Sales Volume in Dollars= Fixed Costs/ 1- (variable Costs/ Sales)

Break Even Sales Volume in Units = Fixed Costs/ Contribution Margin per Unit

Break Even Sales Volume in Dollars= Fixed Costs/ 1- (variable Costs/ Sales)

Break Even Sales Volume in Dollars= $6,240/1-(130/190)

Break Even Sales Volume in Dollars= $6,240/1-0.68

Break Even Sales Volume in Dollars= $6,240/0.32

Break Even Sales Volume in Dollars= $ 19500

FinnZ [79.3K]2 years ago
8 0

Answer:

$19,760

Explanation:

The Net/operating income is the difference between the total sales and total costs, Total cost is made up of the fixed and variable cost.

Like the total sales, the total variable cost is also affected by the level of activities or units produced/sold.

Mathematically,

Net income = Total sales - variable cost - fixed cost

At breakeven point, the net income is zero as the total sales is equal to the total cost.

Let the number of units to be sold to break even be b

190b - 130b - $6,240 = 0

60b = $6,240

b = 6240/60

= 104 units

Dollar volume of sales per month is required to break-even

= 104 * 190

= $19,760

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2 years ago
Desired consumption is Cd = 100 + 0.8Y - 500r - 0.5G, and desired investment is Id = 100 - 500r. Real money demand is Md/P = Y -
allochka39001 [22]

Answer:

Under a) r=0.1;Id=50;Cd=750;P=7 b) P only changes and is now 9.33

Explanation:

a)  In a closed economy national savings are equal to investments or:

S d = I d = Y - Cd - G

Id = Y - 100 - 0.8*Y + 500*r - 0.5*G

100 - 500*r = 0.2*Y -100 + 500*r -0.5*G

200 - 1000*r = 0.2*1000 - 0.5*200=100

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b) If money supply increases to 2800, the price level would be:

P = 2800/Y - 2000*i = 2800/Y- 2000*(i-inflation)

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1 year ago
A wireless store owner takes presale orders for a new smartphone and tablet. He gets 320 preorders for the smartphone and 310 or
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Answer:

y = $440

x = $ 580

Explanation:

Given data:

order for smartphone is 320

order doe tablet is 310

sale of all order is $322,000

total combined price for smartphone and tablet is $1020

let cost of one smartphone is x

let cost of one tablet is y

320 x +310 y = 322,000..... 1

x + y = 1020 .....2

solving 1 and 2 we get

y = $440

x = $ 580

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Answer:

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The effect of inflation on the profitability of a product cannot be overemphasized. At the time of inflation the profitability of a project will be reduced and the cost of capital will increase. The effect of inflation on a project can be determined by applying inflation factor.

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