A producer of pottery is considering the addition of a new plant to absorb the b

Question

A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $8,828 per month and variable costs of 42 cents per unit produced. Each item is sold to retailers at a price that averages 95 cents.

What volume per month is required in order to break even? (Round your answer to the nearest whole number.)

What profit would be realized on a monthly volume of 51,768 units? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

What profit would be realized on a monthly volume of 96,060 units? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

What volume is needed to obtain a profit of $23,040 per month? (Round your answer to the nearest whole number.)

What volume is needed to provide a revenue of $22,212 per month? (Round your answer to the nearest whole number.)

A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $8,828 per month and variable costs of 42 cents per unit produced. Each item is sold to retailers at a price that averages 95 cents.

Explanation / Answer

for break even quantity(Q)

Q= fixed cost/(p-v)

p : price

v: variable cost

so

a) volume = 8,828/(0.95-0.42)

= 16656.60 ~16657

b1) profit = (51768-16657)*(0.95-0.42) = 18608.83

b2)profit = (96,060-16657)*(0.95-0.42) = 42083.59

c)let volume be v

then (v-16657)*(0.95-0.42) = 23,040

=> v = 60128.69~ 60129

d)let volume be v

then (v-16657)*(0.95-0.42) = 22,212

=> v = 58566

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