Customers-R-Us, LLC had sales and costs as shown below in 2013. All data that is

Question

Customers-R-Us, LLC had sales and costs as shown below in 2013. All data that is be considered is listed. a What was the profit in 2013 b What is the break even quantity? c If the price, fixed cost and the variable cost per unit stay the same as in 2013, what will the quantity sold have to be to increase profits to $1 million in the coming year? d If the sales quantity is 40,000, and fixed and variable costs stay the same as in 2013, what would the unit price need to be to attain profits of $250,000 in the coming year? 2013 Sold units 30,000 Unit Price $20.00 Material Cost each $1.75 Labor cost each $4.25 Total Annual Fixed Cost $500,000 Customers-R-Us, LLC had sales and costs as shown below in 2013. All data that is be considered is listed. a What was the profit in 2013 b What is the break even quantity? c If the price, fixed cost and the variable cost per unit stay the same as in 2013, what will the quantity sold have to be to increase profits to $1 million in the coming year? d If the sales quantity is 40,000, and fixed and variable costs stay the same as in 2013, what would the unit price need to be to attain profits of $250,000 in the coming year? 2013 Sold units 30,000 Unit Price $20.00 Material Cost each $1.75 Labor cost each $4.25 Total Annual Fixed Cost $500,000

Explanation / Answer

a. profit = (20-1.75-4.25)*30000 - 500000 = ($80,000) = loss of $80,000

b. let qty = X

Hence 500000+(1,75+4,25)X <= 20X for break even => X = 35715

c. let qty = X

Hence 20X- 500000-(1,75+4,25)X >= 1000000

=> X = 107143

d. Let unit price be P

Hence,

40000P - (1.75+4.25)*40000 - 500000 = 250000

Hence P = $24.75

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