Dream Company is specialized in manufacturing a single type of perfume made from Rose scent. The general
Question:
Dream Company is specialized in manufacturing a single type of perfume made from Rose scent. The general manager has hired you as a financial analyst in order to study the cost structure and provide the board of shareholders with pertinent recommendations.
After careful investigation, you discovered that the variable cost per manufactured unit is at $40. Furthermore, the company incurs the following expenses:
Rent: $10,000
Electricity: $5,000
Depreciation of the machines: $6,000
Salary of administrative employees: $19,000
Rose scent employed in the manufacturing process (variable cost): 100 liters at $400 per liter
Each bottle of perfume consumes 50 ml (0.05 liter) of Rose scent
Requirements:
1- Calculate the total fixed cost for Dream Company
2- Find the produced quantity (in bottle) of perfumes
3- In reality, the Dream Company has produced 2,000 bottles of perfume. Evaluate the minimum price P the company should sell one bottle of perfume in order to start realizing a net profit.
4- The company decided to sell each bottle of perfume at $80 per unit. Draw in the same figure the sales and total cost (note: the x-laxis represents the quantity Q
5- Given that selling price is P = $80 per bottle, evaluate the breakeven point (in quantity) for Dream Company.
Fraud examination
ISBN: 978-0538470841
4th edition
Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma