1. A product at the jennings company enjoyed reasonable sales volumes, but its contributions to profits were disapointing. Last year, the 17,500 units were produced and sold. The selling price is $22 per unit, the variable cost is $18 per unit, and the fixed cost is $80,000.

(a) what is the break even quantity for this product? Use both graphic and algebraic approach for your answer.

(b) if sales were not expected to increase, by how much would jennings have to reduce their variable cost to break even?

(c) Jennings believes that a $1 reduction in price will increase sales by 50 percent. is this enough for Jennings to break even? If not, by how much would sales have to increase?

(d) Jennings is considering ways to either simulate sales volume or decrease variable cost. management believes that either sales can be increased by 30 or percent or that variable cost can be reduced by 85 percent of its current level. Which alternative leads to higher contributions to profits, assuming that each is equally costly to implement?(hint-Calculate profits for both alternatives and identify the one having the greatest profits.)

(e) What is the percent change per unit profit contribution generated by each alternative in part d?