- 25 Marks
QMDM – JULY 2020 – L2 – Q6 – Breakeven Analysis for Office Chairs
Define revenue, cost, profit functions; calculate breakeven, revenue/income at breakeven, profit at 1,500 units, and units for GHe75,000 profit
Question
Agorwu Company produces office chairs. The price per chair is GHe99.75 and the variable cost per chair is GHe49.75. The following fixed costs are incurred:
| Depreciation of plant and equipment per year | GHe20,000 |
|---|---|
| Property taxes per year | GHe12,000 |
| Manager’s salary and fringe benefits per month | GHe5,200 |
Perform a breakeven analysis of this company:
a. What is the total revenue function? (2 marks)
b. What is the total cost function? (2 marks)
c. What is the profit function? (2 marks)
d. What is the breakeven point in number of chairs? (2 marks)
e. What is the revenue at the breakeven point? (2 marks)
f. What is the income at the breakeven point? (2 marks)
g. Determine the profit when 1,500 chairs are produced in a year. (8 marks)
h. How many chairs must be sold for the company to make GHe75,000 in a year? (5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Breakeven Point, Cost Function, Profit Calculation, Profit Function, Revenue Function
- Level: Level 2
- Series: JULY 2020
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