cost volume profit and break even
http://img202.imageshack.us/img202/5497/bep2.jpg
a) Sales = T R = 1,200,000 VC = TVC / TR = 50%
FC = 400,000
TVC = 600,000
N.I. ( S – VC ) x – FC > N.I.= ( 1 – 0.5 )x – 400,000
0 = 0.5x – 400,000
i'm stuck on part D.
400,000 = 0.5x
X = 800,000
Break Even would have occurred at 800,000
b) Present > N.I. = TR – TC or TR – VC – FC
N.I. = 1,200,000 – 600,000 – 400,000
N.I. = 200,000
200,000 = ( 1 – 0.50)x – 400,000
200,000 = 0.50x – 400,000
600,000 = 0.50x
X = 1,200,000
Next year, the Number of units increases by 15%
1,200,000 * 1.15 = 1,380,000
N.I. = (1-0.50) 1,380,000 – 400,000
N.I. = 290,000
Net Income = 290,000 – 200,000
Net Income = 90,000
If sales increased by 15% next year the net income will increase by $90,000
a) New Fixed Cost * 90%
= 400,000 * 0.90
= 360,000
N.I. ( S- VC )x – FC
= (1 -0.50)* 1,200,000 – 360,000
= 600,000 – 360,000
Net Income = 240,000
240,000 – 200,000 = 40,000
The Net Income increases by 40,000
b) IF variable costs are 10% higher in the year ahead (but sales and fixed costs remain the same as last year), how much (in$) will the net income decrease?
