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A company has a single product with selling price of $12 per unit, which is calculated as a variable cost per unit, plus 20%. At an output level of 5000 units it makes loss of $8000.
What is the companies total fixed cost?
Not sure about your second question as I don’t know what the actual questions are, but for the first question:
Selling price is $12, made up of variable costs + a mark up of 20%. Therefore the mark up is $12*(20/120) = $2, and therefore the variable cost is $12 – $2 = $10.
At 5000 units sold @ $12, total sales are $60,000. Variable costs are 5000 x $10 = $50,000, therefore profit before fixed costs is $10,000 ($60,000 – $50,000).
As a loss of $8,000 is made, this must therefore mean that fixed costs are $18,000. In summary:
Sales…………………………………$60,000
Variable costs…($50,000)
Fixed Costs…….($18,000)
Total costs…………………………..($68,000)
…………………………………………________
Profit/(Loss)…………………………($8,000)
…………………………………………________Thanks, i do understand.
A company uses total quality management and has recorded the following cost of quality for the period.
staff training $8000
inspection $12000
warranty $20000
rework of faulty items detected before delivery to customers $15000What would be the net benefit of spending extra??
A company is uses Total Quality Management and has recorded the following costs of quality for a period.
$
Staff Training Cost 8000
Inspection Cost 12000
Warrenty Claims 20000
Rework of Faulty items detected before the 15000
delivery to the customerCalculate Total Internal Failure Cost ($)
Can anyone tell how to solve this??
Total fixed cost is 18000.
cuz,
12=variable cost + 20% variable cost.
12=1.2vc
so, vc here is 12/1.2=10.
selling price – total cost = profit.
here profit is -8000.
so, total cost is (5000*12)- total cost = -8000.
68000 is total cost.
68000/5000=13.6.
in this we know that 10 is variable cost and the rest of 3.6 is fixed cost per unit.
muliply it with total unit 5000 will give u an answer of 18000.
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