Reference no: EM132576498

Cost-Volume-Profit analysis 

Company YOYO is specialized in manufacturing a single type of perfume made from Rose scent. The general manager has hired you as a financial analyst in order to study the cost structure and provide the board of shareholders with pertinent recommendations.

After careful investigation, you discovered that the variable cost per manufactured unit is at $40. Furthermore, the company incurs the following expenses:

Rent: $10,000

Electricity: $5,000

Depreciation of the machines: $6,000

Salary of administrative employees: $19,000

Rose scent employed in the manufacturing process (variable cost): 100 liters at $400 per liter

Each bottle of perfume consumes 50 ml (0.05 liter) of Rose scent.

Requirements:

Question 1. Calculate the total fixed cost for company YOYO. 

Question 2. Find the produced quantity (in bottle) of perfumes. 

Question 3. In reality, the company YOYO has produced 2,000 bottles of perfume. Evaluate the minimum price P the company should sell one bottle of perfume in order to start realizing a net profit? 

Question 4. The company decided to sell each bottle of perfume at $80 per unit. Draw in the same figure the sales and total cost (note: the x-axis represents the quantity Q). 

Question 5. Given that selling price is P = $80 per bottle, evaluate the breakeven point (in quantity) for company YOYO.