Thread: Break even Volume ( i think )

During an economic slowdown, an automobile plant lost $6,000,000 on the production and sale of 9000 cars. Total revenue for the year was $ 135,000,000. If the break even volume for the plant is 10,000 cars per year, calcuate

a) The plant's total fixed costs for a year.
b) the net income if unit sales for the year had been equal to the five
year average of 12,000

somehow i think i screwed up with a which in result screwed be over to b

T.R. : 135,000,000
BEV : 10,000
N. i : 6,000,000

N. i = ( s - vc ) x - FC
T.R. = (S)x

135,000,000 = 9,000s

s = 15,000

Originally Posted by diehardmath4

During an economic slowdown, an automobile plant lost $6,000,000 on the production and sale of 9000 cars. Total revenue for the year was $ 135,000,000. If the break even volume for the plant is 10,000 cars per year, calcuate

a) The plant's total fixed costs for a year.
b) the net income if unit sales for the year had been equal to the five
year average of 12,000

somehow i think i screwed up with a which in result screwed be over to b

T.R. : 135,000,000
BEV : 10,000
N. i : 6,000,000

N. i = ( s - vc ) x - FC
T.R. = (S)x

135,000,000 = 9,000s

s = 15,000

You have two equations: for breakeven

0=10000*UnitPrice-(FixedCosts+10000*UnitCost)

and for this year:

-6000000=9000*UnitPrice-(FixedCosts+9000*UnitCost)

We are told that the total revenue on 9000 sales is 135000000, so the UnitPrice is 135000000/9000=15000


So we have the two simultaneous linear equations:

FixedCosts+10000*UnitCost=150000000

FixedCosts+9000*UnitCost=9000*1500+6000000=1350000 00+6000000=141000000


Which you now have to solve.

Subtracting the second from the first gives:

1000*UnitCost=9000000

or UnitCost=9000

So the FixedCost=150000000-10000*9000=60000000

Though the arithmetic still needs checking

CB

F.C. + 10,000 * U.C. = 1,500,000
F.C + 9,000 * u.c =

1,000uc = 1,500,000

u.c. = 1,500

Originally Posted by diehardmath4

F.C. + 10,000 * U.C. = 1,500,000
F.C + 9,000 * u.c =

1,000uc = 1,500,000

u.c. = 1,500

My earlier post has been updated with the errors corrected

CB