A machine manufacturing firm sells a small component for $25 per unit. The variable costs consist of two parts: the variable manufacturing costs are $12.50 per unit and the selling costs are $2.50 per unit. The fixed costs for the period are $3600. The capacity is 600 units per period.

a. Draw a detailed break-even chart showing the fixed costs line, total costs line, total revenue line, break-even point, and profit and loss areas.

b. Determine the break-even volume and break-even revenue, and compute the break-even as a percent of the capacity.

c. What is the new break-even point in units if the fixed costs are decreased by $625 in a period and the variable manufacturing costs per unit are increased by 10%.

AppendixLO1