Ascent Ltd. has introduced a new mountain bike that can be sold for $290 per unit. The variable costs are $115 per unit and the fixed costs are $5250 per period. The production capacity is 100 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. Determine the break-even volume and break- even revenue, and compute the break-even as a percent of the capacity.

b. What is the break-even in dollars if fixed costs are reduced to $3800 in a period and variable cost per unit is increased by 20%?

AppendixLO1