Answer:
Profit- $(39560)
Break-even units=1,205 units
Explanation:
The profit in dollar would be determined as follows:
Profit = total contribution - Fixed costs
Total contribution = sales revenue - variable cost
Total contribution = ($261× 216) - (221× 216)
= $8,640
Profit = 8, 640 - 48200= $(39560)
Break-even units
The number of units to be sold to break even will be determined as follows:
Units to break-even = Fixed cost /(selling price - variable cost)
= 48,200/(261-221)
=1,205 units
Answer:
a.There is a monthly loss of 49505 if 216 units are sold per month.
b. The break even in units is 1205 units.
Explanation:
a.
Profit is a function of Revenue less total costs. The revenue is calculated by multiplying the selling price by the quantity sold.
The revenue at 216 units is = 216 * 261 = 56376
The total cost at 216 units = 48200 + 221 * 261 = 105881
The profit/loss at 216 units = 56376 - 105881 = -49505
Thus, there is a loss of 49505 at production and sale of 216 units.
b.
The break even in units can be calculated by dividing the Foxed costs/overheads by the contribution margin per unit.
The contribution margin per unit = Selling price per unit - variable cost per unit
Break even in units = Fixed cost or Overheads / Contribution margin per unit
The contribution margin = 261 - 221 = 40 per unit
Break even in units = 48200 / 40 = 1205 units per month
