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Finding Profit

I am doing a complicated accounting question, which I have to present. It has to do with finding the profit and break even point

I have the formula which is sales - vc (*volume) - F.C
But I don't know how to use it

Here is the info
Potato turnips parsnips carrots
Area occupies (ha) 25 20 30 25
Yield pr ha 10 8 9 12
S.P per tone 1000 1250 1500 1350

V.C fertiizer 300 250 450 400
Seeds 150 200 300 250
Pesticides 250 150 200 250
Direct wages 4000 4500 5000 5700

Fixed overhead $540,000

It says to find the profit?
Help please

There is a second question but if I figure this out the other questions will be easier:confused:

Profit is calculated from: Sales - Variable Cost/unit * units - Fixed cost.

Sales: you can calculate this from the crop area, yield and selling price data for the 4 different crops. For example: for potatoes you have 25 ha * 10 tonnes/ha * $1000/tonne = $250,000

I assume that the variable cost figures are complete, and not in units of cost per tonne of cost per ha, but you'll have to verify that. For potatoes you have $300+ 150 + 250 + 4000 = $4700. Again, please verify that I interpreted your vc data correctly.

So add up all the sales revenue for all 4 crops, subtract the variable costs for all 4 crops, then subtract the fixed overhead, and you'll have your profit.

The answer is 140,000

Quote:

Originally Posted by ebaines

Profit is calculated from: Sales - Variable Cost/unit * units - Fixed cost.

Sales: you can calculate this from the crop area, yield and selling price data for the 4 different crops. For example: for potatoes you have 25 ha * 10 tonnes/ha * $1000/tonne = $250,000

I assume that the variable cost figures are complete, and not in units of cost per tonne of cost per ha, but you'll have to verify that. For potatoes you have $300+ 150 + 250 + 4000 = $4700. Again, please verify that I interpreted your vc data correctly.

So add up all the sales revenue for all 4 crops, subtract the variable costs for all 4 crops, then subtract the fixed overhead, and you'll have your profit.

:D Thanks a lot and yes you got the variance correct.

Quote:

Originally Posted by fr3shkiid4lf

the answer is 140,000

Hey thanks for the final answer:D but what was your Total contribution margin.

Quote:

I have the formula which is sales - vc (*volume) - F.C

This is not quite right. It's {(sales - variable)* volume} - fixed.
The way you have it is saying the variable only is multiplied by volume and then subtracted from sales. But you have to multiply sales by volume also. It might be easier to look at it in a colume where it takes a little more sense:
Sales
- Variable Cost
=Contribution Margin
- Fixed Cost
= Profit

In order to actually get the profit, you would have to multiply both the sales price and the variable costs by the volume. If they're quoted by unit, you'd only end up with what you got from selling one of them.

here is the info

Quote:

potato turnips parsnips carrots
area occupies (ha) 25 20 30 25
yield pr ha 10 8 9 12
S.P per tone 1000 1250 1500 1350

I don't know how to interpret this. I don't have a clue what a ha is, but apparently you have 25 of them for potatoes, and you can yield 10 potatoes per ha. So how many total can you yield? And I don't know what a "tone" is so I don't know what the $1000 is supposed to be for. I'm quite sure there's something else to this or the prices would certainly never be correct. I just can't figure it out cause I don't know what those words are supposed to be. But once you have that...

They list the variable costs. Just add them up. Multiply that by the volume also and you'll have total variable costs for each vegetable. You're just plugging into that "equation." Then subtract fixed from it. Don't multiply fixed -- the whole point of fixed is that it is what it is, regardless of volume. So fixed is $540,000, period.

fentom can you please clarify? I think the term 'ha' refers to hectare and 'tone' is a typo error it should be tonne (metric tonne). Variable costs given are per hectare.

Is this place acting up or is it my imagination? None of those answers were there when I posted and they certainly weren't near the same time. Weird.

Quote:

Originally Posted by morgaine300

Is this place acting up or is it my imagination? None of those answers were there when I posted and they certainly weren't near the same time. Weird.

I would have allowed fentom to clarify. An assumption was used to seek clarification. No it is definitely not your imagination. The metric terms are prevalent in the European Union, India and Pakistan. I know that in the U.S. a ton is of 2000 lbs. whereas in the U.K. it has 2,240 lbs. India and Pakistan were using British weights and measures. Both these countries adopted metric measures starting in the early and late sixties. I do not understand what you mean by "acting up". Perhaps a clarification may help.

If you remember, I had requested information about "S" and "C" corporations which was clarified and added to my knowledge. In the same way, this information may also add to your knowledge.

Quote:

I would have allowed fentom to clarify.

I wasn't stopping anyone from clarifying. I did say I didn't know what it was and therefore didn't know how to work that part out.

Quote:

An assumption was used to seek clarification.

I have no clue what that's supposed to mean.

Quote:

I do not understand what you mean by "acting up". Perhaps a clarification may help.

I was referring to the site acting up. There are 4 replies prior to mine, none of which were there when I posted -- and it's not because we were all posting at the same time. That was the second time I'd seen that happen in a short time. I was curious if anyone else had noticed such a thing. That's all. It had nothing to do with what anyone was saying.

And the fact that I've never heard of a ha does not mean I'm unware that most everywhere but here uses metric. Oh... and we use it for a lot of stuff here too.