Question 1
Olfert Greenhouses has compiled the following estimates for operations.
| Variable costs | 67 500 | 112 700 |
Capacity is a sales volume of $175 000.
Perform a break-even analysis showing
a) an algebraic statement of
(i) the revenue function;
(ii) the cost function;
b) a detailed break-even chart.
Question 2
The gas division of Power-U-Up plans to introduce a new gas delivery system based on the following accounting information.
Fixed costs per period are $4 236; variable cost per unit is $168;
selling price per unit is $211; and capacity per period is 450 units.
a) Draw a detailed break-even chart
b) Compute the break-even point
(i) in units;
(ii) as a percent of capacity;
(iii) in dollars.
c) Determine the break-even point as a percent of capacity
(i) if fixed costs are reduced to $3 788;
(ii) if fixed costs are increases to $5 577 and variable costs are reduced to 75% of the selling price;
(iii) if the selling price is reduced to $191.
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