Reference no: EM13850430
Case Study 1 - Break Even Analysis
Scenario:
The BeDazzled Boutique is a tourist stop in downtown Belleville, MI.
Kathy Potts, the owner of the shop, sells hand-woven blankets for an average price of $30 per blanket. Kathy buys the blankets from weavers at an average cost of $21. In addition, she has selling expenses of $3 per blanket. Kathy rents the building for $300 per month and pays one employee a fixed salary of $500 per month.
1. Determine the number of blankets Kathy must sell to break even.
2. Determine the number of blankets Kathy must sell to generate a profit of $1,000 per month.
3. Assume that Kathy can produce and sell her own blankets at a total variable cost of $16 per blanket, but that he would need to hire one additional employee at a monthly salary of $600.
a. Determine the number of blankets Kathy must sell to break even.
b. Determine the number of blankets Kathy must sell to generate a profit of $1,000 per month
4. Graph your results for scenario 1 (Label the x and y axis, fixed expenses, variable expenses, and breakeven point). You can do the graph in excel, by hand, or any way you see fit as long as you attach it to your submission.
5. Define break even analysis and its importance in the health care industry
6. Define variable costs
7. Define contribution margin
8. Define fixed costs
|
What was the value of ending inventory
: Material $11.50 unit Labor 4.80 unit Overhead 6.20 unit Sales for the year were 31,500 units at $29.60 each. Jerrico uses LIFO accounting. What was the gross profit? What was the value of ending inventory?
|
|
Financing international trade
: The topic addressed in this module is financing international trade. One factor to consider here is the working capital guarantee program. That is, how is this program administered by outside agencies?
|
|
Determine amount of each payment required for sinking fund
: Determine the amount of each payment required for a sinking fund in order that enough money will be available to pay off the $25,000 loan, money earns 3% compounded annually, 10 annual payments.
|
|
What is estimated value of firm after new debt issue
: Firm R currently has $1,000,000 of debt outstanding with a before tax annual coupon of 5%, a constant EBIT of $2,100,000 and 500,000 shares outstanding at a market price of $20.00. What is the estimated value of the firm after the new debt issue? Wha..
|
|
Case study-break even analysis
: Case Study 1 - Break Even Analysis Scenario: The BeDazzled Boutique is a tourist stop in downtown Belleville, MI.
|
|
Define what is meant by control environment
: Define what is meant by control environment. Based on the information provided in the case, explain why the control environment is so important to effective internal control over financial reporting at an audit client like the Baptist Foundation of A..
|
|
According to modigliani miller theory with corporate taxes
: The M Company has an EBIT of $250,000 that is constant over time and a corporate tax rate of 35%. Company M uses $5,500,000 of debt financing. If M used no debt, its cost of equity would be 12%. According to the Modigliani Miller theory with corporat..
|
|
Differentiate the main actions between doing and improving
: Differentiate the main actions between doing and improving your activities
|
|
Differentiate between corporate mission and strategic vision
: Differentiate between corporate mission and strategic vision by taking corporate illustrations
|