Cost-Volume-Profit Relationships Spotless,Inc. ,Sells Only One Product.The Sales Price Per Unit Is

question 105

Essay

Cost-volume-profit relationships
Spotless,Inc. ,sells only one product.The sales price per unit is $50,with variable cost per unit of $40.Fixed costs are $60,000 per month.Maximum capacity is 34,000 units per month.Answer the following questions:
(a)To break-even,how many units must Spotless sell per month? ________ units
(b)If Spotless,Inc. ,sold 25,000 units,what would be its operating income for the month? $________
(c)At present capacity,what is the maximum operating income Spotless can expect to earn per month? $________
(d)Assuming that direct labor cost can be reduced by $2 per unit,what would the maximum operating income be per month? $________

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Definitions:

Inverse Relationship

A relationship between two variables in which one variable increases as the other decreases.

Independent Variable

A variable that is manipulated to observe its effect on a dependent variable in an experiment.

Deterministic Model

A mathematical model in which outcomes are precisely determined through known relationships among states and events, without any randomness.

Probabilistic Model

A mathematical representation of a random system that is characterized by probabilities and randomness.