Night Shades Inc. (NSI) manufactures biotech sunglasses. These sunglasses sell for $150 each, and cost $70 each to produce. Night Shades Inc. has fixed costs of $100,000. a. Calculate Night Shades’ Breakeven point. b. how much profit (loss) will Night Shades have if it sells 500 sunglasses? 4,000 sunglasses? c. Night Shades’ manager expects an operating profit of $200,000. How many sunglasses must be sold to attain this profit?

Night Shades Inc. (NSI) manufactures biotech sunglasses. These sunglasses sell for $150 each, and cost $70 each to produce. Night Shades Inc. has fixed costs of $100,000. a. Calculate Night Shades’ Breakeven point. b. how much profit (loss) will Night Shades have if it sells 500 sunglasses? 4,000 sunglasses? c. Night Shades’ manager expects an operating profit of $200,000. How many sunglasses must be sold to attain this profit?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 16E

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Night Shades Inc. (NSI) manufacturers biotech sunglasses. These sunglasses sell for $150 each, and cost $70 each to produce. Night Shades Inc. has fixed costs of $100,000.a. Calculate Night Shades' Breakeven point.b. how much profit (loss) will Night Shades have if it sells 500 sunglasses? 4,000 sunglasses?c. Night Shades' manager expects an operation profit of $200,000. How many sunglasses must be sold to attain this profit?
Rolf's Golf store sells golf balls for $27 per dozen. The store's overhead expenses are 26% of cost and the owners require a profit of 18% of cost. a. How much does Rolf's Golf store buy the golf balls for? _____per dozen b. What is the price needed to cover all the costs and expenses? c. What is the highest rate of markdown at which the store will still break even? d. What markdown rate would price the golf balls at cost?
A company produces a special new type of TV. The company has fixed costs of $487,000, and it costs $1500 to produce each TV. The company projects that if it charges a price of $2500 for the TV, it will be able to sell 750 TVs. If the company wants to sell 800 TVs, however, it must lower the price to $2200. Assume a linear demand. What are the company's profits if marginal profit is $0?
Nik is a company that manufactures running shoes. It has a fixed cost of $300,000.00. Additionally, it costs $30 to produce each pair. They are sold at $80 a pair. A.Write the cost function, C, of producing x running shoes. B.Write the revenue function, R, from the sale of x running shoes. C.Suppose Nik produces too many running shoes- more than they can sell in the stores. How would this impact profits? Is there anything the managers can do to cut their losses? D.Suppose that we can sell all of the units that we produce. How many running shoes would Nik have to produce/sell in order for the company to make a profit? E.Determine the break-even point. Describe what this means. Graph the lines with at least three points each.
A firm manufactures and sells high quality business printers and ink toners. Each printer sells for $650 and each toner for $100. The average user keeps the printer for 5 years and consumes 4 toners every year. In response to a recent significant drop in printer sales (which will reduce future toner sales as well) the firm wants to lower the printer price to $500. Assume that income from toner sales occurs at year-end and the firm’s cost of capital is 10%. How much of an increase is needed in the toner price to cover the loss in printer price?
Rolf's Golf store sells golf balls for 27 per dozen. The store's overhead expenses are 28% of cost and the owners require a profit of 22% of cost. a. How much does Rolf's Golf store buy the golf balls for? b. What is the price needed to cover all the costs and expenses? c. What is the highest rate of markdown at which the store will still break even?
Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are $18,000. Coyote Corp. has offered to buy 1.000 widgets at $4 each. On this information alone, should Micro accept the offer? A. No, because it will lose $1 per unit B. No, because it will ose $2 per unit C No, because it will exceed capacity D. Yes, because it makes $1 per unit in the short run E. Unable to determine
Leon's bought chairs for $180 less 30% and 20%. The store's overhead is 40% of the selling price and the net profit is 30% of the selling price. (a) What is the regular selling price of the chairs? (b) At what price can the chairs be put on sale so that the store breaks-even?
Husky Crafts currently sells motorboats for $60,000. It has costs of $46,500. A competitor is bringing a new motorboat to the market that will sell for $55,000. Management believes it must lower the price to $55,000 to compete in the market for motorboats. Marketing believes that the new price will cause sales to increase by 12.5%, even with a new competitor in the market. Husky Crafts' sales are currently 2,000 motorboats per year. Required (treat each question independently): What is the new target cost if target operating income is 25% of sales? (3) What is the change in operating income if marketing is correct and only the sales price is changed? (3) What is the target cost if the company wants to maintain its same income level, and marketing is correct? (3)
1. A recently retired professor, Melinda Marketing, plans to establish the Hot-Air FanCompany and manufacture circulating fans. She estimates the fixed cost of operations tobe $357,500 annually. The variable cost of producing the fans is forecasted to be $85 perunit.a. How many fans must be sold to break even if the fans are priced at $150?b. If Hot-Air sells 6,000 fans, what will be the EBIT?c. If Hot-Air sells 6,000 fans and has interest expense of $8,125, what is Hot-Air’stimes-interest-earned? Hot-Air does not have any nonoperating expenses.d. If the fans are priced at $150, what is Hot-Air’s breakeven sales? 2. Vapor Lock Motors’ EBIT is $7,000,000, the company’s interest expense is $2,000,000, and its tax rate is 40 percent. Vapor Lock’s beta is 1.5. a. What is Vapor Lock’s DFL? b. If Vapor Lock were able to grow its EBIT by 50%, what would be the percentage increase in net income? c. If Vapor Lock were able to grow its EBIT by 50%, what would be the resulting net income? 3. A…
A recently retired professor, Melinda Marketing, plans to establish the Hot-Air FanCompany and manufacture circulating fans. She estimates the fixed cost of operations tobe $357,500 annually. The variable cost of producing the fans is forecasted to be $85 perunit.a. How many fans must be sold to break even if the fans are priced at $150?b. If Hot-Air sells 6,000 fans, what will be the EBIT?c. If Hot-Air sells 6,000 fans and has interest expense of $8,125, what is Hot-Air’stimes-interest-earned? Hot-Air does not have any nonoperating expenses.d. If the fans are priced at $150, what is Hot-Air’s breakeven sales?
Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month. Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are S18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each. On this information alone, should Micro accept the offer? A. No, because it will lose $1 per unit B. No, because it will lose $2 per unit C. No, because it will exceed capacity D. Yes, because it makes $1 per unit in the short run E. Unable to determine