Question
18) A manufacturer of calculators has the following information on a new model being released in the spring. Fixed costs per month are $14200; variable
18) A manufacturer of calculators has the following information on a new model being released in the spring. Fixed costs per month are $14200; variable costs per calculator are $5.50; selling price per calculator is $16.00; and warehouse capacity is 5000 units. Determine the following:
a) How much money is the company making per calculator (if we do not factor in fixed costs)?
b) What is the break-even point (in units)?
c) The company wants to increase the selling price by $1. If they do, what is the new break-even point? Explain why the change in break-even units makes sense.
d) What is the profit if the company sells only half their warehouse capacity?
e) How many units does this company have to sell to profit $25,700?
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