Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3,200 composters per month. Annual fixed costs total $648,000.
a) What is the break-even volume?
b) What is the monthly net income at a volume of 2500 composters per month?
c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?
d) At what percent utilization would the annual net income be $226,800?
e) If fixed and variable costs remain the same, how much do the monthly break-even unit sales change for a $1 increase in the selling price?

Question

Quizplus · Accepted Answer

The Answer of Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3,200 composters per month. Annual fixed costs total $648,000.
a) What is the break-even volume?
b) What is the monthly net income at a volume of 2500 composters per month?
c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?
d) At what percent utilization would the annual net income be $226,800?
e) If fixed and variable costs remain the same, how much do the monthly break-even unit sales change for a $1 increase in the selling price?