Tabitha

Tabitha manufactures a product that sells very well. The capacity of her facility is 241,000 units per year. The fixed costs are $122,000 per year, and the variable costs are $11 per unit. The product currently sells for $17.

a. What total revenue is required for a net income of $397,000 per year?

b. If sales were at 55% of the capacity and the variable costs decreased by 25%, what would be the net income per year?

Correct result:

a =  3170000
b =  143100

Solution:


397000 = a - (122000+11•241000)

a = 3170000

Our simple equation calculator calculates it.

b = 17 • 241000 • 0.55 - (122000 + 11•(1-0.25)•241000)

b = 143100

Our simple equation calculator calculates it.



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