Problem 1) Huntsville supplies is evaluating the profitability of leasing a photocopier for its customers to use on a self-serve basis at 10 cents per copy. The copier may be leased for $300 per month plus 1.5 cents per copy on a full-service contract. Huntsville can purchase paper at $5 per 500 sheet ream. Toner costs $100 per bottle, which in normal will last for 5000 pages. Huntsville is allowing for additional costs of 5 cents per copy.
a) How many copies per month must be sold in order to break even?
b) What will be the increase in monthly profit for each 1000 copies sold above the break even point?
Problem 2) Smith´s income statement for the current year is
Sales 300,000
VC 180,000
CM 120,000
FC 70,000
Net income = 50,000
- What was the breakeven point in dollars?
- The company expects sales to rise by 15% in the next year. What will be the total variable costs assuming that the contribution margin percent and fixed costs remain the same? What will be the new net income?