Farm A Farm B

Effective capacity 50 ton grains per acre Effective capacity 40 ton grains per acre
Actual output 36 ton grains per acre Actual output 30 ton grains per acre
Efficiency of A Efficiency of B
0.72 0.75
Ready to eat food

a) How many pies must be sold in order to break even?

Fixed Cost FC = 6000

Revenue per unit R= 7
Variable cost per unit v= 2
Breakeven point QBEP = 1200

b) What would the profit (loss) be if 1,000 pies are made and sold in a month?

Quantity Q= 1000
Pofit P= -1000

c) How many pies must be sold to realize a profit of $4,000?

Profit P= 4000
Quantity Q= 2000

d)If 2,000 can be sold, and a profit target is $5,000, what price should be charged per pie?

Quantity Q= 2000
Profit P= 5000
Revenue R= 7.5 p=Q(R-v)-Fc
 Purchasing one, two, or three machines
Number of Machines Total Annual Fixed Costs Corresponding Range of Output
1 9,600 0 to 300
2 15,000 301 to 600
3 20,000 601 to 900

Variable cost VC= 10

Revenue R= 40

a)Determine the break-even point for each range

Machine 1 Machine 2 Machine 3
320 500 666.6666666667
 Production of vending machines
Make Buy
Annual fixed cost 150,000 None
Variable cost/unit 60 80
Annual volume (units) 12,000 12,000

A) Given these numbers, should the firm buy or make this item?
make 870000
buy 960000

B) There is a possibility that volume could change in the future. At what volume would the manager be indifferent between
make
buy
ger be indifferent between making and buying?
Small firm produces and sells in a five-state area
Revenue per unit 7
Variable cost per unit 3
Fixed cost 42000

A) Prepare a table that shows total profits, fixed costs, variable costs, and revenues for monthly volumes of 10,000, 12,000, a

Volume Total Revenue Total VC Fixed cost Total cost Total Profit
10000
12000
15000

B) What is the break-even point?

BEP
olumes of 10,000, 12,000, and 15,000 units.