/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q7-12OQ A firm is selling two products, ... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 2: Q7-12OQ (page 161)

A firm is selling two products, chairs and bar stools, each at \(50 per unit. Chairs have a variable cost of \)25, and bar stools \(20. Fixed cost for the firm is \)20,000.

a.If the sales mix is 1:1 (one chair sold for every bar stool sold), what is the break-even point in dollars of sales? In units of chairs and bar stools?

b.If the sales mix changes to 1:4 (one chair sold for every four bar stools sold), what is the break-even point in dollars of sales? In units of chairs and bar stools?

Short Answer

Expert verified

a) Break-even point in dollars is$36400, and in units of chairs and bar stools is 728.

b)Break-even point in dollars is $34500 and is 690 units in terms of chairs and bar stools.

Step by step solution

01

Step1:Break-even point

ABreak-even pointis that point in the production process where the firm earns neither loss nor profit. At this point, the total revenue from the sale and the total cost of production equate to each other.

02

Step2:(a) Break-even point in units and dollars when sales mix is 1:1

Break-even point (dollars) = Total fixed costs / [(weighted average selling price -

weighted average variable expense)/ weighted average selling price]

Weighted average selling price = (selling price x weighted sales participation) = $50

Weighted average variable cost = (variable cost x weighted sales participation)

Weighted average variable cost = (25 x 0.5 + 20 x 0.50) = $22.5

Break-even point in dollars (BEP) = 20,000/ [(50 - 22.5)/ 50] = $36,364

03

(b) Break-even point in units and dollars when sales mix is 1:4

Revenue = 50 x 5 = 250

Combined VC = (20 x 4) +25 =105

BEP = 20000/ (250-105) = 138 (rounded)

Sales = 137.93 x 250 = 34,500 (rounded)

Chairs = 138

Bar stools = 138 x 4 = 552 (rounded)

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

You are planning the new layout for the local branch of the Sixth Ninth Bank. You are considering separate cashier windows for the three different classes of service. Each class of service would be separate with its cashiers and customers. Oddly enough, each class of service, while different, has the same demand and service times. People for one class of service arrive every four minutes, and arrival times are exponentially distributed (The standard deviation is equal to the mean). It takes seven minutes to service each customer, and the standard deviation of the service times is three minutes. You assign two cashiers to each type of service.

  1. On average, how long will each line be at each of the cashier windows?
  2. On average, how long will a customer spend in the bank (assume they enter, go directly to one line, and leave as soon as service is complete)? You decide to consolidate all the cashiers so they can handle all types of customers without increasing the service times.
  3. What will happen to the amount of time each cashier spends idle? (Increase, decrease, stay the same, depend on ________)
  4. What will happen to the average amount of time a customer spends in the bank? (Increase, decrease, stay the same, depend on ________)

A cafeteria serving line has a coffee urn from which customers serve themselves. Arrivals at the urn follow a Poisson distribution at the rate of three per minute. In serving themselves, customers take about 15 seconds, exponentially distributed.

a. How many customers would you expect to see on the average at the coffee urn?

b. How long would you expect it to take to get a cup of coffee?

c. What percentage of time is the urn being used?

d. What is the probability that three or more people are in the cafeteria?

e. If the cafeteria installs an automatic vendor that dispenses a cup of coffee at a constant time of 15 seconds, how does this change your answers to (a) and (b)?

Question: A firm has redesigned its production process so that it now takes 10 hours for a unit to be made. Using the old process, it took 15 hours to make a unit. If the process makes one unit each hour on average and each unit is worth $1,500, what is the reduction in work-in-process value?

Question: Francis Johnson鈥檚 plant needs to design an efficient assembly line to make a new product. The assembly line needs to produce 15 units per hour, and there is room for only four workstations. The tasks and the order in which they must be performed are shown in the following table. Tasks cannot be split, and it would be too expensive to duplicate any task.

Task

Task Time

(Minutes)

Immediate

Predecessor

A

1

-

B

2

-

C

3

-

D

1

A,B,C

E

3

C

F

2

E

G

3

E

a. Draw the precedence diagram.

b. What is the workstation cycle time required to produce 15 units per hour?

c. Balance the line so that only four workstations are required. Use whatever method you feel is appropriate.

d. What is the efficiency of your line balance, assuming the cycle time from part (b)?

State in your own words what Little鈥檚 law means. Describe an example that you have observed where Little鈥檚 law applies.
See all solutions

Recommended explanations on Business Studies Textbooks

Actuarial Science in Business

Read Explanation

Organizational Behavior

Read Explanation

Business Data Analytics

Read Explanation

Strategy

Read Explanation

Sales in Business

Read Explanation

Corporate Finance

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.