A security alarm manufacturer expects total annual fixed cost of 180,000,000. The security alarm has a variable cost of 2,700 with a selling price of 4,500.

i. Calculate how many devices should be sold to break-even.

ii. Calculate profit to earn by selling 120,000 alarms.

iii. The manufacturer has further noted that same plant (as it is under-utilized) can also be used to manufacture a component in a fire alarm and vehicle alarm. The plant’s maximum annual operating capacity is 40,000 hours. The selling price, variable cost, and demand data are shown in Table Q4-1. Prepare a production plan, if the manufacturer has already signed a contract for 15,000 security alarm components, and 40,000 Fire alarm components and vehicle alarm components.

 

Transcribed Image Text:

Table Q4-1: Product Manufacturing Information Fire alarm Security alarm 4.500.00 2,700.00 0.5 35,000 Selling price (per circuit) Variable cost (per circuit) Requirement - Machine hours per unit Maximum annual demand (in units) 2,900.00 1,750.00 0.2 50,000 Vehicle alarm 3,250.00 1,850.00 0.4 40,000 Table Q4-1: Product Manufacturing Information Fire alarm Security alarm 4.500.00 2,700.00 0.5 35,000 Selling price (per circuit) Variable cost (per circuit) Requirement - Machine hours per unit Maximum annual demand (in units) 2,900.00 1,750.00 0.2 50,000 Vehicle alarm 3,250.00 1,850.00 0.4 40,000

Answer rating: 100% (QA)

Step 1 i Calculation of Number of devices to be sold to Break even Break even point in units Total annual fixed cost Selling Price per unit Variable c... View the full answer