Business College

1- The General Store at State University is an auxiliary bookstore located near the
dormitories that sells academic supplies, toiletries, sweatshirts and T-shirts,
magazines, packaged food items, and canned soft drinks and fruit drinks. The
manager of the store has noticed that several pizza deliv- ery services near
campus make frequent deliveries. The manager is therefore considering selling
pizza at the store. She could buy premade frozen pizzas and heat them in an
oven. The cost of the oven and freezer would be $27,000. The frozen pizzas
cost $3.75 each to buy from a distributor and to prepare (including labour and
a box). To be competitive with the local delivery services, the manager believes
she should sell the pizzas for $8.95 apiece. The manager needs to write up a
proposal for the university’s director of auxiliary services.
a) Determine how many pizzas would have to be sold to break even.
b) If the General Store sells 20 pizzas per day, how many days would it
take to break even?
c) The store manager anticipates that once the local pizza delivery services
start losing business, they will react by cutting prices. If after a month (30
days), the manager has to lower the price of a pizza to $7.95 to keep
demand at 20 pizzas per day, as she expects, what will the new breakeven point be, and how long will it take the store to break even? (Please
pay attention to the portion of fixed cost which is not covered after the
first month)

Answers

Answer 1

To calculate the break-even point, we may use the following formula:

Break-even point = Fixed expenses / (Price per unit - Variable costs per unit)

a) In this situation, the fixed cost is $27,000, whereas the variable cost is $3.75 per pizza. A pizza will set you back $8.95. As a consequence, the break-even point is 27,000 / (8.95 - 3.75), which is 5,400 pizzas.

Days to break even = 5,400 / (20 - 3.75), which is 324 days assuming the shop sells 20 pizzas each day.

c) If the manager needs to cut the price of a pizza to $7.95 after a month (30 days) in order to sustain demand at 20 pizzas per day, the new breakeven point is: Break-even point = (27,000 - (20 * (8.95 - 7.95)) / (7.95 - 3.75) = 4,800 pizzas

The portion of fixed cost which is not covered after the first month is $27,000 - $1,000 = $26,000.

Days to break even = 4,800 / (20 - 3.75) = 288 days

In either unit (quantity) or revenue (sales) terminology, the break-even point (BEP) or break-even level specifies the amount of sales required to cover overall expenses, which comprise both fixed and variable costs to the organisation. The overall profit is $0 at the break-even point.

Only when the monetary value of sales surpasses the variable cost per unit can a corporation cross the break-even threshold. This means that the selling price of the things must be greater than the cost of the good or its components in order for the firm to repay its original investment (variable and fixed expenditures). The firm can begin to profit after they have crossed the break-even threshold.

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Related Questions

Which of the global PR strategies does the Coca-Cola website use

your discussion with examples from the website.

Answers

Coca- Cola uses a combination of global PR strategies on its website. The company has historically employed the standardization approach.

Presenting a harmonious brand communication and image across all requests. Coca- Cola also adapts its communication to specific original requests following the localisation strategy. On its website, Coca- Cola features elevations, events, and marketing campaigns that appeal to indigenous requests while still adhering to the company's core values. also, Coca- Cola recognises artistic differences, employing across-cultural strategy in its global communication.

By exercising these approaches, Coca- Cola can maintain a consistent brand identity while connecting with different consumers across various requests.

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A process manufacturer that uses the weighted-average method reports the following.
Beginning work in process inventory
Units completed and transferred out
Ending work in process inventory
Equivalent units of production for conversion are:
Units
33,000
103,000
38,000
Conversion
Percent Complete
90%
50%

Answers

The total similar units of production for conversion are:

[tex]103,000+19,000 = 122,000[/tex]

The equivalent units of production for the units completed and transferred out are simply the number of units completed and transferred out, which is 103,000.

To calculate the equivalent units of production for the ending work in process inventory, we need to multiply the number of units in ending work in process inventory by the percentage of completion for conversion.

The number of units in ending work in process inventory is 38,000, and the percentage of completion for conversion is 50%, so the equivalent units of production for the ending work in process inventory are:

[tex](38,000*50)/100 = 19000[/tex]

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Which of the following statement is TRUE?

(1 Point)

Developmental programs improve conceptual skills of managers for the future job.

Training programs improve conceptual skills of nonmanagers for the future job.

Developmental programs improve technical skills of nonmanagers for the current job.

Training programs improve technical skills of mangers for the current job.

Answers

'Developmental programs improve conceptual skills of managers for the future job' is true. The right answer is a.

The goals and content of training and development are different from one another. While "development" refers to a long-term method through which managerial personnel understand conceptual and theoretical knowledge for broad reasons, "training" is a short-term process through which non-managerial personnel acquire technical knowledge and skills for a specific purpose.

Development covers the process through which managers and executives build capacity for both future managing roles as well as skills and competence for their current ones.

The correct answer is option a.

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TB MC Qu. 03-96 (Algo) A process manufacturer that uses...
A process manufacturer that uses the weighted-average method reports the following.
Beginning work in process inventory
Units completed and transferred out
Ending work in process inventory
Saved
Equivalent units o production for conversion are:
Units
33,000
103,000
38,000
Conversion
Percent Complete
90%
50%
H

Answers

The Process A equivalent units of conversion cost is 122,000

How to solve for the units of conversion cost

Units completed and transferred out = 103,000 Units

Conversion cost Completion percentage in ending inventory = 50%

38,000 Units are in ending work in process inventory.

The solution is

103,000 + (38,000 * 50%)

= 103000 + 19000

= 122,000

The Process A equivalent units of conversion cost is 122,000

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What is the cost of Goods sold Percentage using Material cost $135; Labor Cost; $125; Merchandise sells for $689?

Answers

The cost of goods sold percentage is 37.72% approximately.

The cost of goods sold (COGS) could be a budgetary bookkeeping term that alludes to the coordinated costs related to creating or fabricating an item or conveying a benefit. COGS incorporates all of the costs that are straightforwardly related to the generation or procurement of merchandise that is sold by trade, such as the cost of crude materials, labour, and overhead costs.

To calculate the total cost of production we have to add material cost and labour cost.

Material cost = $[tex]135[/tex]

Labour cost = $[tex]125[/tex]

Therefore, total cost = material cost + labour cost.

                                  = $[tex]135[/tex] + $[tex]125[/tex]

                                  = $[tex]260[/tex]

Merchandise sells = $[tex]689[/tex]

Cost of goods sold percentage = (total cost/ revenue) ×[tex]100[/tex]%

                                                    =  ($[tex]260[/tex]÷ $[tex]689[/tex]) × [tex]100[/tex]%

                                                    = [tex]37.72%[/tex]%

Therefore, cost of goods sold percentage is 37.72% approximately.

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