with Cost,Volumn,Profit and Trade Discount

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In summary, the conversation discusses various business problems and their solutions. These include calculating sales needed to break even, determining the price needed to break even for a dog washing service, determining the remaining balance on an invoice and calculating the cost and markup percentage for a book.
  • #1
isuck
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Hello everyone,

I have tried to solve the questions below, but I'm not sure if they are correct. Please help. Thank you.
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1/ The Scarlet Letter bookstore has \$85 000 of sales, variables costs of \$36 550, and fixed costs of \$27 360. What would it sales have to be to break even?

Variable cost/total revenue 36550/85000 = 0.43
1.00X = 27360 + 0.43X
X=48000

2/ Rover's Friends provides dog washing services. For each dog, supplies cost \$3 and wages are \$5. To provide this service, a special room and equipment are needed, at a cost of \$300 per month. Rover's Friends maintains an average of \$30 dogs washed each month. What must Rover's Friends charge as a price for the dog washing service to break even?

Variable cost = 3 + 5 = 8, fixed cost = 300.
(SP*30) = 30 + (8*30)
30SP=540
SP=18

3/ The Peel Trading Company received an invoice dated September 20 for \$16000 less 25% and 20%, terms 5/10, 2/30, n/60. Peel made a payment on September 30 to reduce the debt to \$5000 and a payment on October 20 to reduce the debt by \$3000. (a) What amount must Peel remit to pay the balance of the debt at the end of the credit period? (b) What is the total amount paid by Peel?

(a) 16000(1-0.25)(1-0.20) = 9600

(b) 9600-5000 = 4600
4600(1-0.05) = 4370 paid
9600-4600=5000 balance

5000-3000= 2000 balance
3000(1-0.02)= 2940 paid
The total amount paid by Peel was 4370 + 2940 = 7310

4/ Using a markup of 35% of cost, a store priced a book at \$8.91. (a) What was the cost of the book? (b) What is the markup as a percent of selling price?

(a) Selling price = cost + markup, cost = C
8.91 = C + 0.35C
8.91 = 1.35C
C=6.6

(b) 6.6(0.35) = 2.31
2.31/8.91 = 25.9%
 
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  • #2
Hi isuck and welcome to MHB! :D

To allow dollar signs to render, use \\$.
 
  • #3
Thank you for your help Greg1313.

greg1313 said:
Hi isuck and welcome to MHB! :D

To allow dollar signs to render, use \\$.
 

1. What is the difference between cost, volume, profit, and trade discount?

Cost refers to the expenses incurred in producing a product or providing a service. Volume refers to the quantity of goods or services sold. Profit is the amount of money earned after deducting all costs. Trade discount is a reduction in the price of a product or service, usually offered to customers who buy in large quantities or to promote sales.

2. How do cost, volume, and profit affect each other?

The relationship between cost, volume, and profit can be represented by the cost-volume-profit (CVP) analysis. Changes in cost and volume can impact profit in different ways. For example, an increase in volume can lead to a decrease in unit cost, resulting in higher profit. On the other hand, an increase in cost can lead to a decrease in profit.

3. What is the formula for calculating profit?

The formula for calculating profit is: Profit = Revenue - Total Cost. Revenue is the total amount of money earned from sales, while total cost is the sum of all expenses associated with producing and selling a product or service. Profit is a crucial factor in determining the financial success of a business.

4. How does trade discount impact the overall cost of a product?

Trade discount can reduce the overall cost of a product by lowering the selling price. This can be beneficial for both the buyer and the seller. The buyer can purchase the product at a lower price, while the seller can attract more customers and increase sales. However, trade discount can also affect profit margins, so it should be carefully considered before implementing.

5. What are some strategies for utilizing cost, volume, profit, and trade discount effectively?

One effective strategy is to conduct a thorough CVP analysis to understand the relationship between these factors and how they impact each other. This can help businesses make informed decisions on pricing, production volume, and cost management. Additionally, businesses can also offer trade discounts strategically, such as during slow sales periods or to target specific customer segments, to maximize their benefits.

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