Background:

Baxter Company is a well-known manufacturer of outdoor goods. They recently started production on the Whack-O, a multi-purpose survival tool, which they plan add to their line of camping products.

The costs to manufacture and market the Whack-O are $8.50 per unit plus $92,000 of fixed costs. Baxter Company believes that they can easily sell the Whack-O for $18.50 per unit.

Requirement 1

Given the assumptions above, how many UNITS of the Whack-O would Baxter Company need to sell each month in order to break even?

Baxter Company feels that, given their reputation in the industry, they could easily make a substantial profit on the Whack- O within the first month of sales. They would like to achieve a profit of $25,000 per month on the Whack-O. Baxter's Director of Sales claims that she can sell enough Whack-O tools te

generate a pront of $40,000 per month.

Requirement 2:

1. How many units of the Whack-O would Baxter Company need to in order to sell to generate a profit of $25,000 per month?

2. How many units of the Whack-O would Baxter Company need to sell in order to generate a profit of $40,000 per month?