Bentley Plastics Ltd. has annual fixed costs of $450,000 and variable costs of $15 per unit. The selling price per unit is $25. The production line can manufacture up to 60,000 units per year.
a) What annual revenue is required to break even?
b) What annual unit sales are required to break even?
c) What will be the annual net income at annual sales of:
(i) 50,000 units? (ii) $1,000,000? iii) 90% of capacity
d) What minimum annual unit sales are required to limit the annual loss to $20,000?
e) If the unit selling price and fixed costs remain the same, what are the changes in break-even unit sales and break-even revenue for a $1 increase in variable costs?

Question

Quizplus · Accepted Answer

The Answer of Bentley Plastics Ltd. has annual fixed costs of $450,000 and variable costs of $15 per unit. The selling price per unit is $25. The production line can manufacture up to 60,000 units per year.
a) What annual revenue is required to break even?
b) What annual unit sales are required to break even?
c) What will be the annual net income at annual sales of:
(i) 50,000 units? (ii) $1,000,000? iii) 90% of capacity
d) What minimum annual unit sales are required to limit the annual loss to $20,000?
e) If the unit selling price and fixed costs remain the same, what are the changes in break-even unit sales and break-even revenue for a $1 increase in variable costs?