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Baxter's Sporting Goods needs to decide whether to produce soccer balls or rugby league balls. The manager knows that demand for soccer balls is 2,400
Baxter's Sporting Goods needs to decide whether to produce soccer balls or rugby league balls. The manager knows that demand for soccer balls is 2,400 per month at a selling price of $65 each and monthly demand for rugby league balls is 1,600 at $80 each. Costs of production for the two products are as follows: Monthly rent Materials per unit Labour hours per unit Selling costs per unit Administration costs Labour rate per hour Depreciation on equipment Soccer balls $750 25.00 0.75 $1.25 $2,000 $17.00 240 Rugby league balls $750 35.00 1.25 $0.75 $2,000 $17.00 $240 REQUIRED: a) b) c) Calculate the break-even point in units for each product. Calculate the level of profit or loss for each product? Advise Baxter's management as to whether it is more profitable to produce soccer balls or rugby league balls. (3 marks) (6 marks) (4 marks) NOTE: You should include all of your workings/calculations with your answers
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