| | Question 2 |
| | | Particulars | | | Amount |
| | | Variable cost of the company | | | $525 |
| | | Contribution margin | | | $525 |
| | | Monthly Fixed cost | | | $45,000 |
| | | Monthly break even point | | | 85.7142857143 |
| | | Break even point = | | Total fixed cost |
| | | | | Contribution margin |
| | | Therefore, monthly break even volume of the company 85.7 units |
| | Question 3 |
| | a). | Calculation of Kathy's yearly revenue |
| | | Total revenue = | | Number of pupils x charge per pupil |
| | | Total revenue = | | 400 x 200 |
| | | Total revenue = | | $ 80, 000 |
| | b). | Calculation of Kathy's avearge total cost |
| | | Average total cost = | | highest expense + lowest expense |
| | | | | 2 |
| | | Average total cost = | | ((400 x 20) + (400 x 30)) |
| | | | | 2 |
| | | Average total cost = | | 8,000 + 12,000 |
| | | | | 2 |
| | | Average total cost = | | $10,000 |
| | c). | Kathy's profit |
| | | Yes! Kathy makes a huge profit |
| | | Profit = | ( Revenue - Total expenses ) |
| | | Profit = | ( $ 80,000 - $ 10,000) |
| | | Profit = | $70,000 |
| | Question 4 |
| | | Break even point =Fixed cost/ (selling price -cost) |
| | | Fixed cost = $ 750 |
| | | Selling price = $ 1.5 |
| | | Cost = | $0.50 |
| | | Break even point = | | $750 |
| | | | | ($ 1.5 - $ 0.5) |
| | | Break even point = | | $750 |
| | | | | 1 |
| | | Break even point = | | 750 |
Joss_Smitx01
CHAP1.B.xls
