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I am working on a project that has to deal with Break even points, fixed cost and varible cost, I am not understanding how to do this. any help would be nice. Here is the balance sheet that I am working of of. I have to find the fixed cost, break even point and variable cost...

XYZ NONPROFIT CORPORATION
BALANCE SHEET
2002 (A) 2003 (A) 2004 (A)
ASSETS
Current assets
Cash $2,576.00 $20,904.00 $86,971.00
Investments $12,000.00 $12,000.00 $12,000.00
Accounts Receivables, net $88,764.00 $47,884.00 $199,905.00
Prepaid expense $956.00 $1,270.00 $4,026.00
Total Current Assets $104,296.00 $82,058.00 $302,902.00

Property and equipment, net
Land $192,300.00 $193,372.00 $193,372.00
Furniture and equipment $59,135.00 $61,053.00 $92,267.00
Leasehold improvements $35,539.00 $23,380.00 $110,463.00
Total property and equipment $286,974.00 $277,805.00 $396,102.00

TOTAL ASSETS $391,270.00 $359,863.00 $699,004.00

LIABILITIES AND NET ASSETS

LIABILITIES
Current liabilities
Accounts payable $74,826.00 $39,951.00 $104,201.00
Accrued payroll and related liabilities $57,888.00 $45,954.00 $66,359.00
Note payable (current portion) $6,303.00 $8,070.00 $166,161.00
Capital lease obligation (current portion) $0.00 $0.00 $312.00
Total current liabilities $139,017.00 $93,975.00 $337,033.00

Note payable (long term) $0.00 $0.00 $1,904.00
Capital lease obligation (long term) $171,229.00 $166,004.00 $0.00

Total liabilities $310,246.00 $259,979.00 $338,937.00

NET ASSETS
Unrestricted ($38,418.00) ($105,127.00) $27,202.00
Temporarily restricted $119,442.00 $205,011.00 $332,865.00

Total net assets $81,024.00 $99,884.00 $360,067.00

TOTAL LIABILITIES AND NET ASSETS $391,270.00 $359,863.00 $699,004.00

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asked by Lauren
  1. If you are trying to copy and paste, it's not working. You'll need to type in the rest of your assignment by hand.

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  2. Exercise 10.1
    Variable Cost =

    =
    = $3.93

    Variable Cost = $3.93 per unit
    Fixed Costs:
    At an activity level of 4,900, Total Cost = $26,000
    Since Total Cost = Variable Cost + Fixed Cost
    So:

    $26,000 = Fixed Costs + $3.93x (where x is the number of meals served)

    $26,000 = Fixed Cost + $3.93(4,900)

    $26,000 = Fixed Cost + $19,250

    Fixed Cost = $26,000 - $19,250

    = $6,750

    Fixed Costs = $6,750
    Since the Price of the meal is $5.77, and since at BEP, Revenue = Cost, we can calculate the BEP as follows:

    $5.77x = $6,750 + $3.93x
    $5.77x - $3.93x = $6,750
    $1.84x = $6,750
    x = $6,750 ÷ $1.84
    x = 3,669 meals (monthly)
    The annual BEP = 3,669 × 12
    = 44,022 meals

    To reach the BEP, the WHDM program needs to provide 44,022 meals during the fiscal year.

    If 45,000 meals are served, then Total revenue would be:

    45,000 × $5.77 = $259,650

    At 44,022 meals (BEP), total revenue = 44,022 × $5.77 = $254,007

    Therefore if the 45,000 meals contract is completed, the profit = $259,650 - $254,007

    = $5,643

    If 45,000 meals are served, then Profit would be $5,643



    Exercise 10.1—Answer Key
    Westchester Home Delivered Meals Program
    (Profit Analysis)
    Total Contracted Meals = 45,000
    Break Even Point = 43,992
    _______
    1,008
    Revenue
    1,008 Meals
    @ $5.77 = $5,816.16
    Total Cost
    Per 1,008 Meals
    @ $3.93
    Variable Costs = $3,961.44
    Total Profit = $5,816.16 - $3,961.44 = $1,854.72


    Exercise 10.2
    New River Community Council

    The new BEP is 387

    The new BEP is not a feasible solution because there will not be much profit.

    Slack capacity will exist

    Nicole,
    You did not provide the calculations for this exercise, so I do not know how you worked out this problem.

    Exercise 10.2
    New River Community Council
    Newsletter Break Even Point
    PX = A + BX
    20X = 6,000 + 3,900 + 4.50X
    20X = 9,900 + 4.50X
    (Subtract 4.50 X From Both Sides)
    15.5X = 9,900
    X = 639
    Maximum Capacity = 650
    Break Even Point = 639
    Surplus Capacity = 11
    Note: There are two elements of fixed costs in this example. The salary
    of the Newsletter Coordinator ($6,000 per year) and the salary of
    the assistant ($3,900 per year)



    Exercise 10.3

    Mountain View Senior Adult Program


    $4000/month allocated
    $65/ client
    $4000/month full-time salary
    $10/client for supplies
    120 maximum clients/ nurse/ month

    12*4000=$48000 allocated/year
    Let X=number of clients per year
    $4000*12=$48000/year full-time salary/nurse

    Break-Even Points
    1 Full-Time Nurse

    48000+65X=(48000+10X)
    48000-48000=10X-65X
    -55X=0
    X=0 Clients/year


    2 Full-Time Nurses

    48000+65X=2*48000+10X
    48000-96000=10X-65X
    -55X=-48000
    X=48000/55=873 Clients/year
    X=2*12*120=2880 maximum clients/year

    3 Full-Time Nurses

    48000+65X=144000+10X
    48000-144000=10X-65X
    -55X=48000-144000
    X=(48000-144000)/-55=1745 Clients/year
    X=3*12*120= 4320 maximum clients/year


    Part-Time Nurses

    48000+65X=12*45*X
    12*45*X=48000
    X=48000/(12*45)=89 Clients/year

    The break-even points differ because the total salaries are different.

    With 1 full-time nurse the break-even point occurs when there are no clients. I do not think that this is not feasible because the whole amount allocated would go to the nurse and the nurse wouldn’t have to do anything for their salary.

    If I were the executive director I would choose the direct method with three nurses because the break-even point would allow the maximum number of clients to be served compared to the other choices.

    Exercise 10.3—Answer Key
    Mountain View Senior Adult Program
    Direct Service/Contract Service Delivery Decision
    1. Break Even Point (With One Nurse)
    PX = A + BX
    65X = 4000 + 4000 + 10X
    (4000 overhead + 4000 salary for one nurse)
    65X = 8000 + 10X
    (Subtract 10X from Both Sides)
    55X = 8000
    (Divide Each Side By 55)
    X = 146 hours of service (BEP per month)
    Note: This BEP is outside the feasible range because one nurse
    can only provide 120 hours of service per month.
    Surplus Capacity (120 - 146 = None)
    Exercise 10.3
    Mountain View Senior Adult Program
    Direct Service/Contract Service Delivery Decision
    2. Break Even Point (With Two Nurses)
    PX = A + BX
    65X = 4000 + 4000 + 4000 + 10X
    (4000 overhead + 8000 salary for two nurses)
    65X = 12000 + 10X
    (Subtract 10X from Both Sides)
    55X = 12000
    (Divide Each Side By 55)
    X = 219 hours of service (BEP per month)
    Note: This BEP is within the feasible range because two nurses
    can provide a maximum of 240 (120 x 2) hours of
    service per month.
    Surplus Capacity (240 - 219 = 21)
    Exercise 10.3
    Mountain View Senior Adult Program
    Direct Service/Contract Service Delivery Decision
    3. Break Even Point (With Three Nurses)
    PX = A + BX
    65X = 4000 + 4000 + 4000 + 4000 + 10X
    (4000 overhead + 12000 salary for three nurses)
    65X = 16000 + 10X
    (Subtract 10X from Both Sides)
    55X = 16000
    (Divide Each Side By 55)
    X = 291 hours of service (BEP per month)
    Note: This BEP is within the feasible range because two nurses
    can provide a maximum of 360 (120 X 3 ) hours of
    service per month.
    Surplus Capacity (360 - 291 = 69)
    Exercise 10.3—Answer Key
    Mountain View Senior Adult Program
    Direct Service/Contract Service Delivery Decision
    1. Break Even Point (With Contract Service Delivery)
    PX = A + 45X
    65X = 4000 + 45X
    (4000 overhead)
    65X = 4000 + 45X
    (Subtract 45X from Both Sides)
    20X = 4000
    (Divide Each Side By 20)
    X = 200 hours of service (BEP per month)
    Note: This BEP is within the feasible range because one, two
    three or any number of contract nurses can be used.
    Surplus Capacity (200 - 200 = ZERO)




    Overall, you did well with the assignment. There was one problem/concern with the Exercise #2. The most important point here is that students will read the instructions and try to calculate the solutions.
    I have included the answer key/solution

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    posted by Lauren

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