Rockstar, Inc. manufactures a complete line of mens and womens casual shoes for independent merchants. The average

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Rockstar, Inc. manufactures a complete line of men’s and women’s casual shoes for independent merchants. The average selling price of its finished product is $85 per pair. The variable cost for this same pair of shoes is $44. The firm incurs fixed costs of $150,000 per year.

a. What is the break-even point in pairs of shoes sold for the company?

b. What is the dollar sales volume the firm must achieve to reach the break-even point?

c. What would be the firm’s operating profit or loss (that is, net operating income) at the following units of production sold: 7,000 pairs of shoes? 9,000 pairs of shoes? 15,000 pairs of shoes?

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Foundations Of Finance

ISBN: 9780135160619

10th Edition

Authors: Arthur J. Keown, John H. Martin, J. William Petty

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