Cost structure
You are currently trying to decide between two cost structures for your business: one with a greater proportion of short-term fixed costs and another more heavily weighted to variable costs. Estimated revenue and cost data for each alternative are as follows:
Required:
1. What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same?
2. Suppose your profit goal for the coming year is 5% of sales (i.e., operating profit/sales = 5%). What is the sales level in units needed under each alternative to achieve this goal?
3. Suppose again that your profit goal for the coming year is 5% of sales. What is the sales volume in dollars needed under each alternative to achieve this goal?
| Cost Structure: | Selling price per unit | Variable cost per unit | Short-term fixed costs per year |
|---|---|---|---|
| Alternative 1 | 100 | 75 | 60000 |
| Alternative 2 | 100 | 70 | 65000 |
Required:
1. What sales volume, in units, is needed for the total costs in each cost-structure alternative to be the same?
2. Suppose your profit goal for the coming year is 5% of sales (i.e., operating profit/sales = 5%). What is the sales level in units needed under each alternative to achieve this goal?
3. Suppose again that your profit goal for the coming year is 5% of sales. What is the sales volume in dollars needed under each alternative to achieve this goal?
Correct answer:
Tips for related online calculators
Our percentage calculator will help you quickly calculate various typical tasks with percentages.
Do you have a linear equation or system of equations and are looking for its solution? Or do you have a quadratic equation?
Do you want to round the number?
Do you want to convert time units like minutes to seconds?
Do you have a linear equation or system of equations and are looking for its solution? Or do you have a quadratic equation?
Do you want to round the number?
Do you want to convert time units like minutes to seconds?
You need to know the following knowledge to solve this word math problem:
- algebra
- equation
- expression of a variable from the formula
- arithmetic
- rounding
- basic functions
- percentages
- reason
Units of physical quantities:
Grade of the word problem:
Related math problems and questions:
- Tabitha
Tabitha manufactures a product that sells very well. Her facility has a capacity of 241,000 units per year. The fixed costs are $122,000 annually, and the variable costs are $11 per unit. The product currently sells for $17. a. What total annual revenue i - Average height
There are twice as many girls in the class as there are boys. The average height of girls is 177 cm, and boys 186 cm. What is the average height of students in this class? - Publishing company
Suppose you work for a publishing company, and before launching a new magazine targeting fashion-oriented consumers, your boss wants to hold a meeting with prospective advertisers. Assume that annual expenditures on magazine ads in this genre are normally - Below 5
Below is a collection of test scores from a class of 20 students. Make 2 histograms of the data. Choose your own horizontal scales as long as you have more than 4 cells in each histogram. 65 70 68 87 98 91 77 85 70 72 86 86 94 95 67 88 77 99 74 71
- 15% of
15% of the revenue from sales was CZK 24,000, and it had to be written off as sales tax. What was the net profit on sales? - Engineer Kažimír
Comical errors, disputes and plots arise when converting physical units. The core of today's dispute was the price of natural gas. The unit was changed - from the natural unit of cubic meter of gas to the unit kWh. The goal was to be able to compare the p - Cost and sell price
A wholesaler sold items at a profit of 20% of the sales, which was a profit of P52.80. What were the cost price and selling price of the item?
