.1.You studied the printing costs at your firm. The annual fixed cost of printin
ID: 448589 • Letter: #
Question
.1.You studied the printing costs at your firm. The annual fixed cost of printing is $750,000 and the per-page cost was 2 cents. You have a proposal from a company that would lease the printers to the you for only $400,000 and charge 9 cents per page. What is the breakeven point in pages?
2. A manufacturer would like to reduce its inventory. You are asked to assess its inventory level. You have the following information on average inventories from last year's financial statement:
Raw materials $1,600,000
Work-in-process $1,100,000
Finished goods $900,000
The cost of goods sold last year (50 weeks) was $20 million.
a. What is its total inventory (measured as weeks of supply)?
b. What is its inventory turnover?
Explanation / Answer
Dear Student, only one question is allowed at a time.
1)
Breakeven point in above case is the indifference point.
= Difference in fixed costs / Difference in variable cost per page
= ($750,000 - $400,000) / ($0.09 - $0.02)
= 5 million pages.
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