A manufacturer plans to introduce a new type of shirt based on the following information.
The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $7800.00; and capacity per period is 500 units.
a)Calculate the break-even point
b)Draw a detailed break-even chart.
c)Calculate the break-even point (in units)if fixed costs are reduced to $7020.00
d)Calculate the break-even point (in dollars)if the selling price is increased to $78.00

Question

A manufacturer plans to introduce a new type of shirt based on the following information.
The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $7800.00; and capacity per period is 500 units.
a)Calculate the break-even point
  b)Draw a detailed break-even chart.
c)Calculate the break-even point (in units)if fixed costs are reduced to $7020.00
d)Calculate the break-even point (in dollars)if the selling price is increased to $78.00

Quizplus · Accepted Answer

The Answer is a)i)Let the volume be x units.Then equating the revenue function TR and the cost function TC we obtain:

a)i)Let the volume be x units.Then equating the revenue function TR and the cost function TC we obtain: (100)= 40% b) d)78x = 7800 + 18x Break-Even Sales = 130($78)= $10 140.00

(100)= 40% b) a)i)Let the volume be x units.Then equating the revenue function TR and the cost function TC we obtain: (100)= 40% b) d)78x = 7800 + 18x Break-Even Sales = 130($78)= $10 140.00

d)78x = 7800 + 18x a)i)Let the volume be x units.Then equating the revenue function TR and the cost function TC we obtain: (100)= 40% b) d)78x = 7800 + 18x Break-Even Sales = 130($78)= $10 140.00

Break-Even Sales = 130($78)= $10 140.00

A Manufacturer Plans to Introduce a New Type of Shirt