using the break-even equations to solve for price and variable cost per unit andromeda company's break-even point is 2,400 units. variable cost per unit is $42; total costs are 67,200 per year. what price does andromeda charge?
Break even = 67200(p-VC)
2400 = 67200/(p-42)
2400(p-42) = (p-42)(67200/(p-42))
2400p -100800 =67200
2400p -100800 +100800 = 67200 + 100800
2400p = 168000
2400p/2400 = 168000/2400
P = $70
Parsa Real Estate is a company that buys and rents real estate. The company is looking into buying an office building for $1M.Thebuilding has 10,000 square feet of rentable office space.
The company analysts predict that they can rent the office space for $6 per square foot per month, but demand is a function of price in the following way:
%Occupied=2L0.2*Rent
(Rentisindollarspersquarefootpermonth.Also,at$6.00,Oscarthinkshecanfillabout80% Of the office space.)
The building needs to be maintained (security, insurance, maintenance, etc.), which costs $10,000 per month regardless of occupancy. Also, there is a variable cost of $2 per month for each square foot occupied.
Define there turn on invested capitals the ratio of the profits (PERYEAR)and the invested capital. You can drawan ROIC tree in the same way that we drew a KPI tree in class.Simply have the ROIC as“the root”of the tree instead of profits. Then answer the following questions.
Question 3
HINT: ROIC = (revenues - costs) / invested capital. Use occupancy rate to determine revenues; use fixed and variable costs to determine costs
Question 4
New ROIC (in decimal form):
ROIC = (revenues - costs) / invested capital
23
To solve for the price that Andromeda charges, we can use the break-even equations. The break-even point is the level of sales at which total revenue equals total cost, resulting in zero profit or loss. The formula for calculating the break-even point is:
Break-even point (in units) = Total Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
In this case, we are given:
Break-even point = 2,400 units
Variable Cost per Unit = $42
Total Costs = $67,200 per year
Let's solve for the selling price per unit:
First, we need to determine the Total Fixed Costs. Total Fixed Costs can be calculated by subtracting the Total Variable Costs from the Total Costs.
Total Fixed Costs = Total Costs - (Break-even Point * Variable Cost per Unit)
Total Fixed Costs = $67,200 - (2,400 units * $42)
Total Fixed Costs = $67,200 - $100,800
Total Fixed Costs = -$33,600
Since the Total Fixed Costs are negative, it means there might be an error in the calculations, or it could indicate that the given information is not suitable for the break-even analysis. Please double-check the provided information or attempt the calculations again with accurate data.
If you have any further questions, please let me know.