Given the following data for a firm Fixed costs for one shif

Given the following data for a firm:

Fixed costs for one shift = $60,000

Unit variable costs = $7

Selling price = $12

Number of machines = 6

Number of working days in a year = 340

Processsing time per part = 50 minutes

A. What is the capacity with a single shift? (Annual)

B. What is the capacity with 3 shifts? (Annual)

C. What is the breakeven volume with single shift operation?

D. What is the maximum revenues with a single shift?

Please show your work

Solution

A. Assuming 8 hour shift

No of machines =6

No of minutes per day =480

Days in a year =340

Total capacity annual =340*6*480/50 =19584

B. 3 shifts production will be = 19584*3 =58752

C. Break Even =Fixed Costs/(Selling Price - VC)

=60000/12-7

=60000/5

=12000

D. Maximum revenues with a single shift = 19584*12 =235008

All figires are in $.