The crossover point in units. Introduction : The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

Question

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Answer 1

Question

Chapter 7, Problem 10P

a)

Summary Introduction

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

a)

Expert Solution

Answer to Problem 10P

The crossover point is 82,000 units.

Explanation of Solution

Given information:

Selling price = $2.50 / bag

High speed shredder:

Fixed cost = $85,000 / month

Variable cost = $1.25 / bag

Clunker:

Fixed cost = $44,000 / month

Variable cost = $1.75 / bag

Crossover point:

Formation of equation:

Let ‘x’ denote the number of units. The total cost is calculated by summing the fixed cost with the value obtained by multiplying the total variable cost with ‘x’.

High speed shredder:

Total cost=Fixed cost+(Variable cost×x)=85,000+(1.25×x)=85,000+1.25x (1)

Clunker:

Total cost=Fixed cost+(Variable cost×x)=44,000+(1.75×x)=44,000+1.75x (2)

Calculation of crossover point:

The crossover point is calculated by equating equation (1) with (2).

Equating (1) with (2):

1.25x+85,000=1.75x+44,00085,000−44,000=1.75x−1.25x0.5x=41,000

x=41,0000.5x=82,000 units

Hence, the crossover point is 82,000 units.

b)

Summary Introduction

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

b)

Expert Solution

Answer to Problem 10P

The monthly loss is $10,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=85,000+(1.25×60,000)=85,000+75,000=$160,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=150,000−160,000=−$10,000(Loss)

Hence, the monthly loss is $10,000.

c)

Summary Introduction

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

c)

Expert Solution

Answer to Problem 10P

The monthly profit is $1,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=$44,000+($1.75×60,000)=$44,000+$105,000=$149,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=$150,000−$149,000=$1,000(Profit)

Hence, the monthly profit is $1,000.

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Process A has fixed costs of $1000 and variable costs of $50 per unit. Process B has fixed costs of $500 and variable costs of $15 per unit. If the expected demand is 50 units, according to the crossover point, which process is the best if the demand is 5000? Explain your answer.

Answer 2

Question

Chapter 7, Problem 10P

a)

Summary Introduction

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

a)

Expert Solution

Answer to Problem 10P

The crossover point is 82,000 units.

Explanation of Solution

Given information:

Selling price = $2.50 / bag

High speed shredder:

Fixed cost = $85,000 / month

Variable cost = $1.25 / bag

Clunker:

Fixed cost = $44,000 / month

Variable cost = $1.75 / bag

Crossover point:

Formation of equation:

Let ‘x’ denote the number of units. The total cost is calculated by summing the fixed cost with the value obtained by multiplying the total variable cost with ‘x’.

High speed shredder:

Total cost=Fixed cost+(Variable cost×x)=85,000+(1.25×x)=85,000+1.25x (1)

Clunker:

Total cost=Fixed cost+(Variable cost×x)=44,000+(1.75×x)=44,000+1.75x (2)

Calculation of crossover point:

The crossover point is calculated by equating equation (1) with (2).

Equating (1) with (2):

1.25x+85,000=1.75x+44,00085,000−44,000=1.75x−1.25x0.5x=41,000

x=41,0000.5x=82,000 units

Hence, the crossover point is 82,000 units.

b)

Summary Introduction

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

b)

Expert Solution

Answer to Problem 10P

The monthly loss is $10,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=85,000+(1.25×60,000)=85,000+75,000=$160,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=150,000−160,000=−$10,000(Loss)

Hence, the monthly loss is $10,000.

c)

Summary Introduction

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

c)

Expert Solution

Answer to Problem 10P

The monthly profit is $1,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=$44,000+($1.75×60,000)=$44,000+$105,000=$149,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=$150,000−$149,000=$1,000(Profit)

Hence, the monthly profit is $1,000.

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Answer 3

Question

Chapter 7, Problem 10P

a)

Summary Introduction

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

a)

Expert Solution

Answer to Problem 10P

The crossover point is 82,000 units.

Explanation of Solution

Given information:

Selling price = $2.50 / bag

High speed shredder:

Fixed cost = $85,000 / month

Variable cost = $1.25 / bag

Clunker:

Fixed cost = $44,000 / month

Variable cost = $1.75 / bag

Crossover point:

Formation of equation:

Let ‘x’ denote the number of units. The total cost is calculated by summing the fixed cost with the value obtained by multiplying the total variable cost with ‘x’.

High speed shredder:

Total cost=Fixed cost+(Variable cost×x)=85,000+(1.25×x)=85,000+1.25x (1)

Clunker:

Total cost=Fixed cost+(Variable cost×x)=44,000+(1.75×x)=44,000+1.75x (2)

Calculation of crossover point:

The crossover point is calculated by equating equation (1) with (2).

Equating (1) with (2):

1.25x+85,000=1.75x+44,00085,000−44,000=1.75x−1.25x0.5x=41,000

x=41,0000.5x=82,000 units

Hence, the crossover point is 82,000 units.

b)

Summary Introduction

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

b)

Expert Solution

Answer to Problem 10P

The monthly loss is $10,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=85,000+(1.25×60,000)=85,000+75,000=$160,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=150,000−160,000=−$10,000(Loss)

Hence, the monthly loss is $10,000.

c)

Summary Introduction

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

c)

Expert Solution

Answer to Problem 10P

The monthly profit is $1,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=$44,000+($1.75×60,000)=$44,000+$105,000=$149,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=$150,000−$149,000=$1,000(Profit)

Hence, the monthly profit is $1,000.

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Answer 4

Question

Chapter 7, Problem 10P

a)

Summary Introduction

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

a)

Expert Solution

Answer to Problem 10P

The crossover point is 82,000 units.

Explanation of Solution

Given information:

Selling price = $2.50 / bag

High speed shredder:

Fixed cost = $85,000 / month

Variable cost = $1.25 / bag

Clunker:

Fixed cost = $44,000 / month

Variable cost = $1.75 / bag

Crossover point:

Formation of equation:

Let ‘x’ denote the number of units. The total cost is calculated by summing the fixed cost with the value obtained by multiplying the total variable cost with ‘x’.

High speed shredder:

Total cost=Fixed cost+(Variable cost×x)=85,000+(1.25×x)=85,000+1.25x (1)

Clunker:

Total cost=Fixed cost+(Variable cost×x)=44,000+(1.75×x)=44,000+1.75x (2)

Calculation of crossover point:

The crossover point is calculated by equating equation (1) with (2).

Equating (1) with (2):

1.25x+85,000=1.75x+44,00085,000−44,000=1.75x−1.25x0.5x=41,000

x=41,0000.5x=82,000 units

Hence, the crossover point is 82,000 units.

b)

Summary Introduction

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

b)

Expert Solution

Answer to Problem 10P

The monthly loss is $10,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=85,000+(1.25×60,000)=85,000+75,000=$160,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=150,000−160,000=−$10,000(Loss)

Hence, the monthly loss is $10,000.

c)

Summary Introduction

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

c)

Expert Solution

Answer to Problem 10P

The monthly profit is $1,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=$44,000+($1.75×60,000)=$44,000+$105,000=$149,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=$150,000−$149,000=$1,000(Profit)

Hence, the monthly profit is $1,000.

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Answer 5

Chapter 7, Problem 10P

a)

Summary Introduction

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

a)

Expert Solution

Answer to Problem 10P

The crossover point is 82,000 units.

Explanation of Solution

Given information:

Selling price = $2.50 / bag

High speed shredder:

Fixed cost = $85,000 / month

Variable cost = $1.25 / bag

Clunker:

Fixed cost = $44,000 / month

Variable cost = $1.75 / bag

Crossover point:

Formation of equation:

Let ‘x’ denote the number of units. The total cost is calculated by summing the fixed cost with the value obtained by multiplying the total variable cost with ‘x’.

High speed shredder:

Total cost=Fixed cost+(Variable cost×x)=85,000+(1.25×x)=85,000+1.25x (1)

Clunker:

Total cost=Fixed cost+(Variable cost×x)=44,000+(1.75×x)=44,000+1.75x (2)

Calculation of crossover point:

The crossover point is calculated by equating equation (1) with (2).

Equating (1) with (2):

1.25x+85,000=1.75x+44,00085,000−44,000=1.75x−1.25x0.5x=41,000

x=41,0000.5x=82,000 units

Hence, the crossover point is 82,000 units.

b)

Summary Introduction

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

b)

Expert Solution

Answer to Problem 10P

The monthly loss is $10,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=85,000+(1.25×60,000)=85,000+75,000=$160,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=150,000−160,000=−$10,000(Loss)

Hence, the monthly loss is $10,000.

c)

Summary Introduction

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

c)

Expert Solution

Answer to Problem 10P

The monthly profit is $1,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=$44,000+($1.75×60,000)=$44,000+$105,000=$149,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=$150,000−$149,000=$1,000(Profit)

Hence, the monthly profit is $1,000.

Answer 6

Chapter 7, Problem 10P

a)

Summary Introduction

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

a)

Expert Solution

Answer to Problem 10P

The crossover point is 82,000 units.

Explanation of Solution

Given information:

Selling price = $2.50 / bag

High speed shredder:

Fixed cost = $85,000 / month

Variable cost = $1.25 / bag

Clunker:

Fixed cost = $44,000 / month

Variable cost = $1.75 / bag

Crossover point:

Formation of equation:

Let ‘x’ denote the number of units. The total cost is calculated by summing the fixed cost with the value obtained by multiplying the total variable cost with ‘x’.

High speed shredder:

Total cost=Fixed cost+(Variable cost×x)=85,000+(1.25×x)=85,000+1.25x (1)

Clunker:

Total cost=Fixed cost+(Variable cost×x)=44,000+(1.75×x)=44,000+1.75x (2)

Calculation of crossover point:

The crossover point is calculated by equating equation (1) with (2).

Equating (1) with (2):

1.25x+85,000=1.75x+44,00085,000−44,000=1.75x−1.25x0.5x=41,000

x=41,0000.5x=82,000 units

Hence, the crossover point is 82,000 units.

Answer 7

Chapter 7, Problem 10P

a)

Summary Introduction

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

Answer 8

a)

Expert Solution

Answer to Problem 10P

The crossover point is 82,000 units.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Given information:

Selling price = $2.50 / bag

High speed shredder:

Fixed cost = $85,000 / month

Variable cost = $1.25 / bag

Clunker:

Fixed cost = $44,000 / month

Variable cost = $1.75 / bag

Crossover point:

Formation of equation:

Let ‘x’ denote the number of units. The total cost is calculated by summing the fixed cost with the value obtained by multiplying the total variable cost with ‘x’.

High speed shredder:

Total cost=Fixed cost+(Variable cost×x)=85,000+(1.25×x)=85,000+1.25x (1)

Clunker:

Total cost=Fixed cost+(Variable cost×x)=44,000+(1.75×x)=44,000+1.75x (2)

Calculation of crossover point:

The crossover point is calculated by equating equation (1) with (2).

Equating (1) with (2):

1.25x+85,000=1.75x+44,00085,000−44,000=1.75x−1.25x0.5x=41,000

x=41,0000.5x=82,000 units

Hence, the crossover point is 82,000 units.

Answer 13

b)

Summary Introduction

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

b)

Expert Solution

Answer to Problem 10P

The monthly loss is $10,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=85,000+(1.25×60,000)=85,000+75,000=$160,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=150,000−160,000=−$10,000(Loss)

Hence, the monthly loss is $10,000.

Answer 14

b)

Summary Introduction

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

Answer 15

b)

Expert Solution

Answer to Problem 10P

The monthly loss is $10,000.

Answer 16

b)

Expert Solution

Answer 17

b)

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=85,000+(1.25×60,000)=85,000+75,000=$160,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=150,000−160,000=−$10,000(Loss)

Hence, the monthly loss is $10,000.

Answer 20

c)

Summary Introduction

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

c)

Expert Solution

Answer to Problem 10P

The monthly profit is $1,000.

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=$44,000+($1.75×60,000)=$44,000+$105,000=$149,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=$150,000−$149,000=$1,000(Profit)

Hence, the monthly profit is $1,000.

Answer 21

c)

Summary Introduction

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

Answer 22

c)

Expert Solution

Answer to Problem 10P

The monthly profit is $1,000.

Answer 23

c)

Expert Solution

Answer 24

c)

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Given information:

Monthly sales = 60,000 bags

Selling price = $2.50 / bag

Calculation of total revenue:

Total revenue is calculated by multiplying the monthly sales with the selling price of the bag.

Total revenue=Monthly sales×Selling price=60,000×2.50=$150,000

Calculation of total cost:

The total cost is calculated by adding the total fixed cost with the total variable costs for 60,000 bags.

Total cost=Fixed cost+(Variable cost×60,000)=$44,000+($1.75×60,000)=$44,000+$105,000=$149,000

Calculation of monthly profit or loss:

The profit or loss is calculated by subtracting the total revenue with the total costs.

Profit/loss=Total revenue−Total costs=$150,000−$149,000=$1,000(Profit)

Hence, the monthly profit is $1,000.

Answer 27

Ch. 7.S - Prob. 1DQ Ch. 7.S - Prob. 2DQ Ch. 7.S - Prob. 3DQ Ch. 7.S - Prob. 4DQ Ch. 7.S - Prob. 5DQ Ch. 7.S - Distinguish between bottleneck time and throughput...Ch. 7.S - Prob. 7DQ Ch. 7.S - Prob. 8DQ Ch. 7.S - Prob. 9DQ Ch. 7.S - Prob. 10DQ

The crossover point in units. Introduction : The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

To determine: The crossover point in units. Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.

Answer to Problem 10P

Explanation of Solution

To determine: The monthly profit or loss for high speed shredder when selling 60,000 bags per month.

Answer to Problem 10P

Explanation of Solution

To determine: The monthly profit or loss for Clunker when selling 60,000 bags per month.

Answer to Problem 10P

Explanation of Solution

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Chapter 7 Solutions

To determine: The crossover point in units.

Introduction: The crossover point is the point at which revenue and expenses of the firm are equal. The company will experience neither loss nor profit at break-even point. Feasibility of the project can be determined using the crossover point.