8. A certain processing center has the capacity to assemble 650,000 units per ye

Question

8. A certain processing center has the capacity to assemble 650,000 units per year. At present, it is operating at 65% capacity. The annual income is $416,000. Annual fixed cost is $192,000 and the variable cost is $0.38 per unit assembled.

What is the annual profit or loss atrributable to the center?

At what volume of output des the center break even?

What will be the profit or loss at 70%, 80%, and 90% of capacity on the basis of constant income per unit and constant variable cost per unit? (#29, pg 238)

Explanation / Answer

the fixed cost= $192,000

the production= 65%(650,000)= 422,500 units

the variable cost= 422,500*$0.38= $160,550

the total cost= 160550+192,000= $352,550

here the profit is= 416000-352,550= $63450

to calculate break even we require selling price per unit. it is not proviede in the problem.

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