Chapter OneSOLUTIONS

1a.

2a.

3a.

4.

5.

b.

b.

b.

250

200

150

100

50

01,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

Volume, (v)

Break-even pointTotalRevenue

TotalCost

cf

Rev

enue

, cos

t,an

d pr

ofit

($1,

000s

)

6.

150

125

100

75

50

25

0

Volume, ($1,000s)

Break-even point

TotalRevenue

TotalCost

cf

(lbs.

)

25 50 75 100 125 150 175 200

16.

The increase in fixed cost from $25,000 to$35,000 will increase the break-even point from1,250 to 1,750 or 500 dolls, thus, he should notspend the extra $10,000 for advertising.

17. Original break-even point (from problem) 7 = 1,250New break-even point:

Reduces BE point by 187.5 dolls.

vc

p cf

v=

−=

−=17 000

30 141062 5

,.

vc

p cf

v=

−=

−=35 000

30 101 750

,,

8.

9.

10.

11.

12.

13.

14.

15.

7. vc

p cf

v=

−=

−=$ ,

,25 000

30 101 250 dolls

18. = 24 19. = 175 20. = 6.50