1)Given: Total fixed cost = $420. Variable cost/unit = $20. Revenue/unit = $30.

Question

1)Given: Total fixed cost = $420. Variable cost/unit = $20. Revenue/unit = $30. The breakeven volume is most nearly?

2)Two new rides are being compared by a local amusement park in terms of their annual operating costs. The two rides are assumed to be able to generate the same level of revenue (thus the focus on costs). The Tummy Tugger has fixed costs of $12,000 per year and variable costs of $2.50 per visitor. The Head Buzzer has fixed costs of $5000 per year and variable costs of $3 per visitor. What is the break-even number of visitors per year for the rides to have equal annual costs?

3) The Rule of 78s is a commonly used method of computing the amount of interest when the balance of a loan is repaid in advance.

Adding the numbers representing 12 months gives1+2 + 3 + 4 + 5 + ... + 11 + 12 = 78If a 12-month loan is repaid at the end of one month, for example, the interest the borrower would be charged is 12/78 of the year's interest. If the loan is repaid at the end of 2 months, the total interest charged would be (12 + 11)/78, or 23/ 78 of the year's interest. After 11 months the interest charge would therefore be 77 / 78 of the total year's interest.

Helen borrowed $8,000 on January 1 at 8% annual interest, compounded monthly. The loan was to be repaid in 12 equal end-of-period payments of $700 each. Helen made the first four payments and then decided to repay the balance of the loan with the fourth payment. Thus she will pay the fourth payment plus an additional sum. Based on the Rule of 78s, this sum is most nearly?

4)Venus Computer can produce 24,000 personal computers a year on its daytime shift. The fixed manufacturing costs are $1.8 million and the total labor cost is $8,850,000. To increase its production to 48,000 computers per year, Venus is considering adding a second shift. The unit labor cost for the second shift would be 30% higher than the day shift, but the total manufacturing costs would increase only to $2.4 million from $1.8 million. The unit manufacturing cost for the original day-time shift is most nearly?

5)

SungSam, Inc. is designing a new digital camcorder that is projected to have the following per-unit costs to manufacture: Materials costs- $53; Labor costs- $24; Overhead costs- $97; Total unit cost- $174.

SungSam adds 30% to its manufacturing cost for corporate profit. What is SungSam's profit on each camcorder?

Explanation / Answer

1)

Let the breakeven volume be

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