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AE4 Activity 7 Break Even Analysis

This document contains 7 activities that provide production and cost information for various firms to calculate metrics like total revenue, total cost, break-even point, profit, and optimal production quantity. The activities involve determining quantities, revenues, costs, and prices at different production and sales levels using the information provided, as well as representing relationships with diagrams and equations.

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Maricar Pineda
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460 views

AE4 Activity 7 Break Even Analysis

This document contains 7 activities that provide production and cost information for various firms to calculate metrics like total revenue, total cost, break-even point, profit, and optimal production quantity. The activities involve determining quantities, revenues, costs, and prices at different production and sales levels using the information provided, as well as representing relationships with diagrams and equations.

Uploaded by

Maricar Pineda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Activity 7A

A firm buys merchandise at P20 per unit and sells them at P30 per unit. Fixed cost are at P15,000.
Determine the following:
a. TR, TC and Profit function.
b. Sales volume when profit is P16,000.
c. Profit when sales volume are 1,000 units.
d. The break-even quantity and revenue.
e. The new break-even point if the selling price is increased by 10% but the FC and UVC are
constant.
f. The amount by which the variable cost per unit has to be increased or decreased in order to
break even at 1,000 units, assuming FC and USP are constant.
g. If UVC and FC are constant, the new unit selling price (USP) to break even at 1,000 units.

Activity 7B

A small scale industry sells its products at P2.80 per unit. The variable cost is P1.80 per unit. The total
fixed cost is P20,000.
Determine the following:
a. The break-even quantity and revenue
b. The profit (or loss) at a sales volume of P15,000 units
c. Make a diagram of the total cost, total revenue, break-even point linear relationship.
d. How can profit be generated if there is a loss in (b)
e. Up to how much should the selling price per unit be increased or decreased to break-even at
15,000, assuming that FC and UVC remain constant.
f. TC when sales are 10,000 units.

Activity 7C

A product sells at P12 per unit. Fixed cost id P40 and the variable cost per unit is P7. After
observing that the sale of the product has begun to decline, its per unit selling price is
decreased by 10% of units sold. Variable cost and fixed remain unchanged.
a. Represent the new selling price per unit
b. Write the TR, TC and profit functions.
c. Find the break-even point quantity and revenue.
d. Find the profit at a sale of 50 units
Activity 7D
A small scale manufacturer can sell q number of units of each product produced per week at a
price of (18 – 0.02q) pesos. It costs P8 to make each unit of the product. The fixed cost
associated with producing and selling the product weekly is P450. Determine:
a. The TR, TC and profit Function.
b. Production level to break-even.
c. Maximum profit at this level.
d. Interpret the meaning of the two break-even points.

Activity 7E

Given: TC = f(q) = 0.3q2 – 105q + 120,000 (pesos).


a. What volume should be produced for minimum cost?
b. What is the minimum cost?

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