1 / 14

Cost-Volume-Profit Analysis

Cost-Volume-Profit Analysis. Practice Problems With Solutions. 9.4 Solution.

ethan
Download Presentation

Cost-Volume-Profit Analysis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Cost-Volume-Profit Analysis Practice Problems With Solutions

  2. 9.4 Solution

  3. Another way to answer this question is to note that the contribution of this product = TR – Variable Cost (only) = $100 - $60 = $40, is positive. This is also the difference between Fixed Costs ($50) and operating loss ($10) Question: Why would a business operate at a loss? Answer: Because if they don’t sell anything, they will lose their fixed costs of $50, which is more than their operating loss of $10!

  4. Planned Output “Cost per Unit” implies variable cost! “capacity” = maximum amount!

  5. Solution Procedure

  6. This is extra profit per hour of machine time! = 5/0.5

  7. Problem 9.5 Solution (cont.)

  8. This implies that it takes skilled labor 6/12 = ½ hour to make product X. Equivalently, skilled labor can make 2 product X’s per hour.

  9. * It only takes ½ hour for skilled labor to make one product X! Contribution per one unit of X 1/Units of X per hour Regular Salary + Overtime (OT)

  10. Make or Buy Question * Note that it is cheaper to make products C and D than to buy them…… … but there may be limiting factors!

  11. Problem 9.7 (cont.) Limiting Factor?

More Related