Videos: Breakeven Analysis
Question 1: The Hungry Days Ice Cream Company has fixed costs of $30,000 per month. Each case of ice cream costs $4.50 to make.
(a) Write an equation giving Total Cost as a function of the number of cases of ice cream made. Graph the function in the space below.
(b) The company sells ice cream for $12 per case. Give an equation for the Revenue function and graph the Revenue function below.
(c) Label your graph. Show Profit, Loss and Breakeven.
(d) Calculate the Breakeven point. Express in cases of ice cream, sales dollars and as a percent of capacity if the maximum monthly capacity is 16,000 cases. NOTE: THERE IS A TYPO IN THIS PART THAT I NEED TO FIX IN THE VIDEO:
[latex]$12x =$30x +$4.50x[/latex]
(e) Calculate the profit or loss if 4,001 cases are sold
(f) Calculate the profit or loss if 3,250 cases are sold.
(g) The company wants to make a profit of $75,000 this month. How many cases must they sell?
(h) Hungry Days is considering dropping its prices and would like to make a profit of $82,000 by selling 16,000 cases. What should the new price be? What is the breakeven in units?
- Rain City Umbrellas does a thriving business in selling umbrellas. Each month they spend $1,057 on rent for their prime umbrella kiosk, and $2,000 on a salary for their salesperson. They buy umbrellas wholesale for $7.50 per umbrella. They then sell each umbrella for $26 to wet tourists. Find their breakeven point in sales.
