1. David Willis is considering opening up a new copy center store near a large university....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. David Willis is considering opening up a new copy center store near a large university. If he does, he will rent six machines for $1,200 per month for each machine. Rent, utilities, and wages will total $2,000 per month. David's cost of paper and ink is $0.01 per copy, and he plans to charge $0.05 per copy. 2. a) What is his break-even point? b) Suppose that David thinks he can get by with only four machines. What will his break-even point fall to? c) Suppose that David rents four machines and sells 200,000 copies in one month. What is his NOI for that month? d) David is considering placing in the student newspaper a $200 ad with a coupon for $0.04 per copy for orders of 50 copies or more. He estimates that if he places the ad, he will sell 250,000 copies and that about 50% of his customers will use the coupon. If he places the ad, what will his break-even point and his NOI be? Jim Kop designs game cartridges for home computers. His total fixed cost for designing a game package is $4,000. The cartridges the game is programmed into cost $4 each, and he sells them for $20 each. He currently sells 300 cartridges for each game he designs. a) What are his break-even point, NOI, and DOL now? b) If the cost of a cartridge rises to $6 and he keeps the sales price constant at $20, what will the new break-even point, NOI, and DOL be? c) If the price of a cartridge rises to $6 and he simultaneously raises the sales price to $22, what will the new break-even point, NOI, and DOL be? d) Same question as part (c), expect that fixed costs also increase to $4,500. 3. The C&D TV store currently has fixed costs of $6,000 per month and $400 per TV set. Their sales price for the TV sets is $700 each, and their current volume is 25 sets per month. a) Find C & D's break-even point and their NOI and DOL at the current level of sales. b) Find C & D's break-even point and their NOI and DOL if fixed costs decrease to $4,750 and at the same time the cost of the TV sets rises to $450. 4. The Mobile Shoe Company's weekly fixed costs (rent, utilities, etc.) have just increased to $42,000. Their variable costs for producing shoes include $5 per pair for raw materials and 1/6 labor hour. Mobile has a labor force of 100 employees, who are paid $24 per hour of labor and $27 per hour for overtime (more than 40 hours per week). a) Suppose that Mobile sells shoes for $12 per pair. What is their break-even point? b) Suppose that Mobile sells shoes for $10 per pair. What is their break-even point? c) What is the break-even point if overtime labor costs $30 instead of $27 per hour? 1. David Willis is considering opening up a new copy center store near a large university. If he does, he will rent six machines for $1,200 per month for each machine. Rent, utilities, and wages will total $2,000 per month. David's cost of paper and ink is $0.01 per copy, and he plans to charge $0.05 per copy. 2. a) What is his break-even point? b) Suppose that David thinks he can get by with only four machines. What will his break-even point fall to? c) Suppose that David rents four machines and sells 200,000 copies in one month. What is his NOI for that month? d) David is considering placing in the student newspaper a $200 ad with a coupon for $0.04 per copy for orders of 50 copies or more. He estimates that if he places the ad, he will sell 250,000 copies and that about 50% of his customers will use the coupon. If he places the ad, what will his break-even point and his NOI be? Jim Kop designs game cartridges for home computers. His total fixed cost for designing a game package is $4,000. The cartridges the game is programmed into cost $4 each, and he sells them for $20 each. He currently sells 300 cartridges for each game he designs. a) What are his break-even point, NOI, and DOL now? b) If the cost of a cartridge rises to $6 and he keeps the sales price constant at $20, what will the new break-even point, NOI, and DOL be? c) If the price of a cartridge rises to $6 and he simultaneously raises the sales price to $22, what will the new break-even point, NOI, and DOL be? d) Same question as part (c), expect that fixed costs also increase to $4,500. 3. The C&D TV store currently has fixed costs of $6,000 per month and $400 per TV set. Their sales price for the TV sets is $700 each, and their current volume is 25 sets per month. a) Find C & D's break-even point and their NOI and DOL at the current level of sales. b) Find C & D's break-even point and their NOI and DOL if fixed costs decrease to $4,750 and at the same time the cost of the TV sets rises to $450. 4. The Mobile Shoe Company's weekly fixed costs (rent, utilities, etc.) have just increased to $42,000. Their variable costs for producing shoes include $5 per pair for raw materials and 1/6 labor hour. Mobile has a labor force of 100 employees, who are paid $24 per hour of labor and $27 per hour for overtime (more than 40 hours per week). a) Suppose that Mobile sells shoes for $12 per pair. What is their break-even point? b) Suppose that Mobile sells shoes for $10 per pair. What is their break-even point? c) What is the break-even point if overtime labor costs $30 instead of $27 per hour?
Expert Answer:
Answer rating: 100% (QA)
1 a The breakeven point is the level of sales at which the total revenue equals the total cost Lets calculate the breakeven point for Davids copy center Fixed costs Rent utilities and wages 2000 per m... View the full answer
Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Posted Date:
Students also viewed these finance questions
-
David Willis is considering opening a new copy shop near a large university. If he does, he'll rent six machines for $1,200 a month each. Rent, utilities, and salaries will total $2,000 per month....
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Mario and Kaitlin are married and file a joint tax return. They have adjusted gross income of $385,000 that includes $4,700 of investment income ($3,000 short-term capital gains and $1,700 of...
-
A monatomic ideal gas ( = 5/3) is contained within a perfectly insulated cylinder that is fitted with a movable piston. The initial pressure of the gas is 1.50 105 Pa. The piston is pushed so as to...
-
A chain is looped around two gears of radius 40 mm that can rotate freely with respect to the 320-mm arm AB. The chain moves about arm AB in a clockwise direction at the constant rate of 80 mm/s...
-
Refer to the information from QS 21-18. Compute the variable overhead spending variance and the variable overhead efficiency variance and classify each as favorable or unfavorable. Data From QS 21-18...
-
Elite Realty acts as an agent in buying, selling, renting, and managing real estate. The unadjusted trial balance on March 31, 2014, is shown below. The following business transactions were completed...
-
Activity 3 Response: As an investigation of scientific question B, consider an object that is not the human body, but that also has a consistently higher temperature than the environment. Based on...
-
Megah Corporation is evaluating cash dividend versus share repurchase. Companies have RM 9,000 extra cash, current earning price (EPS) is RM46 per share and the stock currently sells form RM1.30 per...
-
How can I audit my social media presence to align with my career goals as a senior Intelligence Analyst, team leader, or project manager, as well as academic accomplishments of completion of my...
-
A semi-circular loop with radius R = 26.4 cm, carrying current 0.668 A is placed in a magnetic field of strength B =333 mT, as shown in the picture. What is the magnitude of the torque exerted on the...
-
Compose an essay on Literature analysis. Analyze the various aspects of literature including clear cut examples.?
-
Produce a list of recommendations for Red Bull to enhance their market competitiveness (concerning the UK market)
-
You now need to fill and decorate the APPLE TURNOVER Log the activity in your journal and ask a teacher, assessor or senior staff member to sign the relevant journal pages to confirm that you...
-
Tind the progecton of y onto u when y: %3D -4 2. projung [1] %3D 3. proj.'y = "[] : 4 4. proj y = # [:7 [] 6. Proj,'y = -4
-
[a] Two foam blocks, each with a charge of 19 micro coulombs (1 C = 10-6 C), are both held in place 19 cm apart in the east-west direction. A foam ball with a charge 49 C is placed 55 cm north of the...
-
What is the difference between business risk and financial risk?
-
If a firm anticipates financing a project with a capital mix different than its current capital structure, describe in realistic terms how the firm is subjecting itself to a calculation error if its...
-
What is a seasoned offering, and why are seasoned securities valued more highly than securities sold in an IPO?
-
The things that might lead a person to quit might not be the same things that lead a person to stay with an organization. For example, another job offer or the tendency to always be looking for new...
-
Divide the team into three groups. Each group will choose value, brand, or retention equity. Or, if team sizes are smaller, each team will select an equity component. For each equity component,...
-
Generate survey or interview items that would capture value-, brand-, or retention-equity levels in workers. If possible, ask a sample of your friends and neighbors to take a survey based on your...
Study smarter with the SolutionInn App