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Break even
Asked Mar 5, 2006, 05:05 PM
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2 Answers 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. |
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