1. The Willow Furniture Company produces tables.

The fixed monthly cost of production is

$8,000, and the variable cost per table is $65. The tables sell for $180 a piece. a. For a monthly
volume of 300 tables, determine the total cost, total revenue, and profit.
Total cost = 8000 + 300(65) = 27500
Total revenue = 300 x 180 = 54000
Profit = 54000 - 27500 = 26500

b. Determine the monthly break-even volume for the Willow Furniture Company.
Break even volume
= Fixed cost/ (selling price/unit – variable cost/unit)
=8000/ (180-65)
=69.56
Monthly break even volume = 70 (round off to the nearest decimal)

2. The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is
$60,000. The variable cost of recapping a tire is $9. The company charges $25 to recap a tire. a.
For an annual volume of 12,000 tires, determine the total cost, total revenue, and profit.
Total cost = 60000 + 12000(9) = 168000
Total revenue = 12000 x 25 = 300000
Profit = 300000 - 168000 = 132000

b. Determine the annual break-even volume for the Retread Tire Company operation.
Break even volume
= Fixed cost/ (selling price/unit – variable cost/unit)
=60000/ (25-9)
=3750
Annual break even volume = 3750
3.Evergreen Fertilizer Company produces fertilizer. The company’s fixed monthly cost is
$25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for
$0.40 per pound. Determine the monthly break-even volume for the company.
Break even volume
= Fixed cost/ (selling price/unit – variable cost/unit)
=25000/ (0.40-0.15)
=100000
Monthly break even volume = 100000