Asked by Joseph Wilson on Jul 15, 2024
Verified
The Woodstock plant of Goodstone Tires manufactures a single line of automobile tires. In its first fiscal quarter, the plant had total revenue of $4,500,000 and net income of $900,000 from the production and sale of 60,000 tires. In the subsequent quarter, the net income was $700,000 from the production and sale of 50,000 tires. Calculate the unit selling price, the total revenue in the second quarter, the variable costs per tire, and the total fixed costs per calendar quarter.
Variable Costs
Charges that vary in relation to the volume of output or services provided by a firm.
Fixed Costs
Expenses that do not change regardless of the level of production or business activity, such as rent, salaries, and insurance.
Selling Price
The amount of money for which an item is sold, potentially different from listing or cost price due to discounts or negotiations.
- Determine the consequences of alterations in the volume of sales, costs incurrence, and pricing mechanisms on the profitability of enterprises through the lens of Cost-Volume-Profit analysis.
- Determine the contribution margin for each unit and its proportionate ratio to assess the financial success of a product.
Verified Answer
GK
Gagandeep kaur DhillonJul 19, 2024
Final Answer :
S = $75 per tire; TR = $3,750,000; VC = $55 per tire; FC = $300,000
Learning Objectives
- Determine the consequences of alterations in the volume of sales, costs incurrence, and pricing mechanisms on the profitability of enterprises through the lens of Cost-Volume-Profit analysis.
- Determine the contribution margin for each unit and its proportionate ratio to assess the financial success of a product.