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1) Break-even analysis (LO5-2) Shock Electronics sells portable heaters for $35 per unit, and the variable cost to produce them is $22. Mr. Amps estimates
1) Break-even analysis (LO5-2) Shock Electronics sells portable heaters for $35 per unit, and the variable cost to produce them is
$22. Mr. Amps estimates that the fixed costs are $97,500.
a. Compute the break-even point in units.
b. Fill in the table (in dollars) to illustrate the break-even point has been achieved.
Sales
- Fixed costs
Total variable costs
Net profit (loss)
2) Break-even analysis (LO5-2) The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez autograph stamped
on them. Each bat sells for $35 and has a variable cost of $22. There are $97,500 in fixed costs involved in the production
process.
a. Compute the break-even point in units.
b. Find the sales (in units) needed to earn a profit of $262,500
3) Break-even analysis (LO5-2) Shawn Pen & Pencil Sets Inc. has fixed costs of $80,000. Its product currently sells for $5 per
unit and has variable costs of $2.50 per unit. Mr. Bic, the head of manufacturing, proposes to buy new equipment that will cost
$400,000 and drive up fixed costs to $120,000. Although the price will remain at $5 per unit, the increased automation will
reduce costs per unit to $2.
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