# Break even

Asked Mar 5, 2006, 05:05 PM — 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.

 CaptainForest Posts: 3,684, Reputation: 2085 Ultra Member #2 Mar 5, 2006, 05:18 PM
How do you think you would do this?

Post back and someone will look over your answers.
 keyshuna Posts: 6, Reputation: 1 New Member #3 Mar 5, 2006, 05:28 PM
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

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