Product Alpha has been a staple in Omega Corp.'s product line for several years. Annual fixed costs of production and administration related to this product in the past have been $643,500. Annually, variable costs of production and sales have been $17 per unit. The selling price in the past has been $28 per unit. Based on the appearance of competing products on the market, management has asked you to do the following:
(a) Compute the breakeven point in units and sales in dollars for the present product.


(b) Compute the breakeven point in units and sales dollars if the variable costs increased by $3 per unit and the fixed costs increased by $14,375 per month.

(c) Using the information from (b) an expected additional monthly advertising charge of $10,000, and a monthly sales rate of 15,000 units, compute the competitive selling price that the company must obtain in order to have a profit of $32,000 per month.

CaptainForest

How do you think you would do this?

Post back and someone will look over your answers.

keyshuna

My answers I got:
(a) 58,500 units and 58,500 x28 =$1,638,000
(b) sp=28
-vc=20
cm=8 unit
Fc= 657,875 (14,375+643,500)
657,875/8=82,234units
82,234x28=$2,302,552
(c) can't figure out