By how much must it cut its fixed cost

Assignment Help Financial Management

Reference no: EM131010496

a. A firm has fixed cost of $100,000. It charges a price of $25 per unit, has variable cost per unit of $15, and seeks to make $50,000 in profit. What output must the firm produce and sell to achieve this profit? 150,000/10 = 15,000 units output b. The firm in the above example wants to cut its fixed cost by enough to make $100,000 at the same quantity as found in your answer to part a. Its variable cost per unit and price remain the same as in part a. By how much must it cut its’ fixed cost?

Reference no: EM131010496

Questions Cloud

Increase the attractiveness of the stock in free market : The board of directors of API, a relatively new electronics manufacturer, has decided to beginning paying a common stock dividend to increase the attractiveness of the stock in the free market. what is the current value of API's common stock? If the ..

How much money could you take out at the end : How much will $20,000 invested today at 3% interest be worth in 5 years if it is compounded Annually?Monthly - how much money could you take out at the end of 7 years?

The income statement is an important financial statement : The income statement is an important financial statement used by individual who are interested in the operation of business enterprise explain how the periodicity assumption and the revenue recognition and expense recognition principle provide guidan..

What factors influenced the arbitrators decisions : Summarize the arbitration reports, including the nature of each case and the arbitrators' rulings. What factors influenced the arbitrators' decisions? Did these factors differ between the two cases

By how much must it cut its fixed cost : a. A firm has fixed cost of $100,000. It charges a price of $25 per unit, has variable cost per unit of $15, and seeks to make $50,000 in profit. What output must the firm produce and sell to achieve this profit? 150,000/10 = 15,000 units output b. B..

Is investment good one based on these cash flow estimates : The CT Computers Corporation is considering whether to begin offering customers the option to have their old personal computers (PCs) recycled when they purchase new systems. What are the project cash flows? You can assume that the recycled PCs cost ..

What is the npv of investing in the new technology : Silver Bear Golf (SBG) is a manufacturer of top quality golf clubs with a specialty of putters. Currently, each putter they sell brings in $240 of revenue at a cost of $160. This past year, they sold 1,300 putters and they expect this number to grow ..

Architecture for real-time systems : Architecture for Real-time systems - A discussion of design issues in real-time systems using multicore architectures

Expected marginal tax rate at time of first distribution : James wants to convert $30,000 balance in his traditional IRA account into a Roth IRA. What is the account value in 35 years assuming expected growth of 5.7% and current tax rate of 25% and expected marginal tax rate at time of first distribution of ..

User Account

All Pages