Brouillette Corporation publishes inspirational books. The company prepared the following revenue and cost estimates for 2011.

a. Calculate Brouillette's break-even point for 2011.
b. Assume that Brouillette is currently selling 25,000 copies of the book. A special order is received for 1,500 copies. Selling cost per book will only be $1.50 per unit, but production cost per unit will increase by $0.75. At what selling price per unit should Brouillette quote the book if the company desires to have a total after-tax profit of $21,000. The company's tax rate is 30%. (Round upwards to the nearest cent.)
c. Brouillette estimates that 4,000 additional copies of the book can be sold if a leather
cover is added to those copies. The cover will increase variable product costs by 20% and fixed product cost will increase by 30%. The new book will be sold for $25 per unit. Should Brouillette publish the book with the leather cover? Provide supporting computations for your answer.
d. Brouillette is considering accepting an offer from a foreign company to publish 5,000 copies of a book. Brouillette would sell the book to the foreign company for $20 per unit. Relative to this publication, variable production costs will increase by 35% and variable selling costs will increase by 10%. The publication will not cause any impact on fixed costs, but it is estimated that this publication will cause a reduction of 1,000 units of current sales. Should Brouillette take the foreign company's business? Provide supporting computations for your answer.

Question

Brouillette Corporation publishes inspirational books. The company prepared the following revenue and cost estimates for 2011.
  
a.	Calculate Brouillette's break-even point for 2011.
b.	Assume that Brouillette is currently selling 25,000 copies of the book. A special order is received for 1,500 copies. Selling cost per book will only be $1.50 per unit, but production cost per unit will increase by $0.75. At what selling price per unit should Brouillette quote the book if the company desires to have a total after-tax profit of $21,000. The company's tax rate is 30%. (Round upwards to the nearest cent.)
c.	Brouillette estimates that 4,000 additional copies of the book can be sold if a leather 
	cover is added to those copies. The cover will increase variable product costs by 20% and fixed product cost will increase by 30%. The new book will be sold for $25 per unit. Should Brouillette publish the book with the leather cover? Provide supporting computations for your answer.
d.	Brouillette is considering accepting an offer from a foreign company to publish 5,000 copies of a book. Brouillette would sell the book to the foreign company for $20 per unit. Relative to this publication, variable production costs will increase by 35% and variable selling costs will increase by 10%. The publication will not cause any impact on fixed costs, but it is estimated that this publication will cause a reduction of 1,000 units of current sales. Should Brouillette take the foreign company's business? Provide supporting computations for your answer.

Quizplus · Accepted Answer

The Answer of Brouillette Corporation publishes inspirational books. The company prepared the following revenue and cost estimates for 2011.
  
a.	Calculate Brouillette's break-even point for 2011.
b.	Assume that Brouillette is currently selling 25,000 copies of the book. A special order is received for 1,500 copies. Selling cost per book will only be $1.50 per unit, but production cost per unit will increase by $0.75. At what selling price per unit should Brouillette quote the book if the company desires to have a total after-tax profit of $21,000. The company's tax rate is 30%. (Round upwards to the nearest cent.)
c.	Brouillette estimates that 4,000 additional copies of the book can be sold if a leather 
	cover is added to those copies. The cover will increase variable product costs by 20% and fixed product cost will increase by 30%. The new book will be sold for $25 per unit. Should Brouillette publish the book with the leather cover? Provide supporting computations for your answer.
d.	Brouillette is considering accepting an offer from a foreign company to publish 5,000 copies of a book. Brouillette would sell the book to the foreign company for $20 per unit. Relative to this publication, variable production costs will increase by 35% and variable selling costs will increase by 10%. The publication will not cause any impact on fixed costs, but it is estimated that this publication will cause a reduction of 1,000 units of current sales. Should Brouillette take the foreign company's business? Provide supporting computations for your answer.

Brouillette Corporation Publishes Inspirational Books