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Homework 4 - University of Delaware FINC 200

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Alexandra DiPaolo FINC200-050 1) Longstreet Inc. has fixed operating costs of $470,000, variable costs of $2.80 per unit produced, and its product sells for $4.00 per unit. What is the company's br... eak-even point, i.e., at what unit sales volume would income equal costs? a. 391,667 f/(p-v) b. 411,250 470,000/(4-2.8) c. 431,813 470,000/1.2 d. 453,403 =391,667 e. 476,073 2) Your uncle is considering investing in a new company that will produce high quality stereo speakers. The sales price would be set at 1.5 times the variable cost per unit; the variable cost per unit is estimated to be $75.00; and fixed costs are estimated at $1,200,000. What sales volume would be required to break even, i.e., to have EBIT = zero? a. 28,880 f/(p-v) b. 30,400 =1,200,000/(112.5-75) c. 32,000 =32,000 d. 33,600 e. 35,280 3) Southwest U's campus book store sells course packs for $15 each, the variable cost per pack is $9, fixed costs to produce the packs are $200,000, and expected annual sales are 50,000 packs. What are the pre-tax profits from sales of course packs? a. $ 72,900 15(50,000)-9(50,000)-200,000 b. $ 81,000 750,000-450,000-200,000 c. $ 90,000 =100,000 d. $100,000 e. $110,000 4) Southwest U's campus book store sells course packs for $16 each. The variable cost per pack is $10, and at current annual sales of 50,000 packs, the store earns $75,000 before taxes on course packs. How much are the fixed costs of producing the course packs? a. $164,025 P= $16 V=$10 Q=50,000 EBIT=$75,000 b. $182,250 EBIT=PQ-VQ-F c. $202,500 Solve for F= PQ-VQ-EBIT d. $225,000 (16)(50,000)-(10)(50,000)-75,000= 225,000 e. $247,500 [Show More]

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