Re: [ vuZs.net ] MGT613 - PRODUCTION/OPERATIONS MANAGEMENT GDB NO. 02 IDEA SOLUTION

this is right on answer is wrong see hand outs page 76 example

On Tue, Jun 7, 2011 at 1:31 AM, Ather Hussain <ather76@gmail.com> wrote:

The CEO of Cannon is considering adding a new line of digital camera, which will require leasing new equipment for a monthly payment of Rs. 80,000. Variable Costs would be Rs. 400 per camera and cameras would be sold for Rs. 4000 only.

 

1. How many cameras would be sold in order to break even?

2. What would be the profit/loss if the 100 cameras are made and sold in 1 month?

3. How many cameras must be sold to realize a profit of Rs. 50,000?

 

Solution:

Part 1)

QBEP = FC/ (R-VC)

QBEP = 80000/(4000-400)  = 22.22 = 23

23 cameras would be sold in order to break even

 

Part 2)

Profit/loss = Q * (R-VC) - FC

Profit/loss = 100*(4000-400)-80000 = 280000

280000 would be the profit if the 100 cameras are made and sold in 1 month

 

Part 3)

Q = (FC+P)/( R-VC)

Q = (80000+50000)/(4000-400) = 36.11 = 37

37 cameras must be sold to realize a profit of Rs. 50,000?

--

Regards,

__________________
A t h e r H u s s a i n
MBA (Finance), 4th Semester

Virtual University

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