ITT: Nikose missed class, isn't sure on his math homework.

[Nikose Tyris]

So, I missed my math class last week. I got a handout at noonish today and told to finish it and hand it in by 6.

...I have no idea what I'm doing. It's asking me about Break-Even Points, and I'm feeling okay with it- but I was wondering if anyone would be okay with checking my work for me?

I'm not asking anyone to do my homework, but if someone could just look at my answers and say "That looks right" I'd be greatful.

I'll post those right here under a big swap tag.

Lots of math homework.
BMAT 110 Breakeven Take Home Quiz Form C
1) Market research for a new product indicates that the product can be sold for $185 per unit.
Cost details are as follows:
Sale price / unit - $185.00
Variable cost per unit - $95.00
Fixed cost per period - $9450.00
Production capacity per period – 280 units
A) Compute the break-even point in units, dollars, and as a percent of the capacity.
Capacity ( C ) =280
Sale Price ( S ) =$185.00
Variable Costs ( VC ) =$95.00
Fixed Costs ( FC ) =$9450.00
Contribution Margin ( CM ) : S-VC =$90.00
BEP in Units: FC/CM: =105
BEP in $ = (FC/CM)*S: =$19,425.00
BEP % =37.5%


Draw a detailed break-even chart showing cost and revenue lines, the break-even point and profit and loss areas. Use the graph paper provided.

[See Graph Paper]

B) Compute the break-even point in dollars if the selling price is increased by $10 and the fixed costs are reduced by $50.

$9,400/$100.00*195.00 = $18,330.00


C) Compute the break even point in units if the variable cost per unit is increased by 5% and the fixed cost is increased by $268.50.

$95+$4.75=$99.75
$9450+$268.50=$9718.50
BEP point in Units: 102.03


2) A firm manufactures a product which sells for $40 a unit. The variable cost consists of two parts: The variable manufacturing cost is $22.50 per unit, and the selling expense is $4.00 per unit. The fixed cost for the period is $4428.00. Capacity is 800 units per period.

A) Compute the break even point in units and as a percent of capacity.

(I’m cheating to simplify the equation; adding the ‘selling expense of $4 per unit into the VC of $22.50 per unit from the get-go. It should not affect the final answer.)

BEP in units = FC/CM
CM = S-VC = 40-26.50 = 13.50
FC=4428
4428/13.50=328
The Break-Even point in units is 328.

BEP in % = (FC/CM)/C*100
% = (4428/13.50)/800*100
As a percent of the capacity, the break-even point is 41%.

B) Determine the break-even point in units if the fixed cost is decreased by $558 and the variable manufacturing per unit is increased by 10%.
(The variable increase is $24.75. Adding the $4 in, is $28.75)

FC/CM = BEP in Units
28.75/(S-VC) = BEP in Units
28.75/(40-28.75)=BEP in Units
28.75/11.25 = 344

The break even point in units is 344.

[Geminex]

Huh. Okay, that looks interesting. I haven't done this mathematically before, but we did economies of scale in eco.

1)
A) looks fine.
B) looks fine.
C)...
$95+$4.75=$99.75
$9450+$268.50=$9718.50
BEP point in Units: 102.03

Ergo...

CM= 185 - VC(99.75) = $85.25
9718.50/85.25=114

Or did I miss something here?


I'll do 2 in a bit, got some stuff to do right now. Hope that helps.

[Nikose Tyris]

...And this is why I asked for help. Thanks Gem; I screwed that one up. I wonder if that means question 2 has the same mistake...

[Geminex]

No problem. I don't see anything wrong with question 2.
Just out of curiosity, what math class is this? This seems pretty practical, not what I'm used to.

[Seil]

I just want to state that you guys are probably computers. Something at one of those fancy schools, like Princeton or Harvard. Regular people math is just so much more simple than that.

[Nikose Tyris]

This is BMAT 100, or "Business Mathematics" or "Mathematics of personal finance".

You're right, it's pretty straightforward, but I'm kind of rusty.

[Professor Smarmiarty]

Good, now do it in base x !

[Geminex]

Shush, we are busy calculating at what quantities to produce in order to best exploit the common worker.

[Melfice]

Originally Posted by Seil

I just want to state that you guys are probably computers. Something at one of those fancy schools, like Princeton or Harvard. Regular people math is just so much more simple than that.

Actually, we did this in Economics back at high school I think. Third or fourth year (out of five). Or was that actually in math class? Hmmm...
Regardless, we had it somewhat toned down, I do believe, but remarkably similar.

It really shouldn't be too hard once you figure it out.
Not that I'm going to be hazarding a try. This is ancient history, as far as I'm concerned.

[Nikose Tyris]

Insult to Injury: Completed homework, turned it in.

First response: "We didn't do contribution margin in class. The equation you were using was wrong." I might be getting a 0 for being MORE correct then I needed to be. :/

hate when that happens.