Name: Shahara A.

Balating

Student Id Number: 20100623

Kindly put ​a yellow highlight​ on your final answer.

Problem 1
A couple of entrepreneurial business students at State University decided to put their education
into practice by developing a tutoring company for business students. While private tutoring was offered, it
was determined that group tutoring before tests in the large statistics classes would be most beneficial.
The students rented a room close to campus for $200 for 3 hours. They developed handouts based on
past tests, and these handouts (including color graphs) cost $25 each. The tutor was paid $30 per hour,
for a total of $90 for each tutoring session.
a. If students are charged $60 to attend the session, how many students must enroll for the
company to break even?
Room Rental (fixed cost) = $200 per 3hrs
Tutor fee(fixed cost) =$90 per 3 hrs
Handouts=$25
Selling price=$60

BEP= 200+90/ ($60-$25)

= 290/35
​=8.28 or 9 students

b. A somewhat bigger room is available for $400 for 3 hours. The company is considering this
possibility. How would this affect the break-even point?
BEP in Units= $400 + 90/($60-$25)
=$490/$35
​=14 students

Problem 2
Katherine D’Ann is planning to finance her college education by selling programs at the football
games for State University. There is a fixed cost of $400 for printing these programs, and the variable
cost is $3. There is also a $1,000 fee that is paid to the university for the right to sell these programs.
a. If Katherine was able to sell programs for $5 each, how many would she have to sell in order to
break even?
$5 = Selling price
$400= fixed cost
$1000= fixed cost
$3 =variable cost

BEP= $1000+$400/($5-$3)
=1400/2
​=700 units of sell programs
 b. Katherine D’Ann has become concerned that sales may fall, as the team is on a terrible losing
streak, and attendance has fallen off. In fact, Katherine believes that she will sell only 500
programs for the next game. If it was possible to raise the selling price of the program and still sell
500, what would the price have to be for Katherine to break even by selling 500

Problem 3
Anna is planning to enter the construction industry as a panel formwork supplier. The potential
number of forthcoming projects, Anna forecasted that within three years, your equipment cost for
producing formworks is $300,000. The variable unit cost for making one panel is $1,500. The sale price
for each panel will be $2,500. If you charge $2,500 for each panel, how many panels Anna needs to sell
in total, in order to start making money?
BEP IN UNITS= $300,000/($2500-$1500)
​=300 UNITS OF PANELS

Problem 4
Lina Sia intends to open a franchise business to supply a nationally-known line of women’s
shoes. Sia found a good location in California to open her shop, and have determined that the average
prices and costs of operating the store are:

Selling Price $500

Cost of the pair of shoes $200

Rent $3,000

Company Insurance $600

Utilities and Telephone $200

Salaries $300

a. How many pairs of shoes must be sold to break even?

BEP=$4,100/($500-$200)
​=13.66 or 14 pairs of shoes
b. What would the total revenue be at this break-even point?
R= (14 *500)+4100
=7,000+4,100
 ​=$11,100 total revenu
c. If Sia adjusts the selling price to $600, how many pairs of shoes must be sold to break even?
BEP= $4,100/($600-$200)
​= 10.25 or 11 UNITS of pair of shoes
d. If Sia decreases the selling price by $50, how many pairs of shoes must be sold to break even
BEP= $4,100/($50-$200)
​=-27.33 or 28

Problem 5
A manufacturing company supplies its products to construction job sites. The average monthly
fixed cost per site is $40,500, while each unit cost $35 to produce and the selling price is $150 per unit.
Determine the monthly breakeven volume.
BEP =$40,500/($150-$35)
=​352.1 or 353

Problem 6
A store sells t-shirts. The average selling price is $150 and the average variable cost (cost price)
is $90. Thus, every time the store sells a shirt it has $60 remaining after it pays the manufacturer. This
$60 is referred to as the unit contribution.

a. Suppose the fixed costs of operating the store (its operating expenses) are $10,000 per
year. Find breakeven in units.

b. If fixed costs rose to $11,000, breakeven in units volume would be?

c. If the average selling price rose by $16, breakeven volume would fall or rise?

****END OF QUIZ****