Question
Big Wave Corporation sells two types of surfboards. They sell the Sunrise for $1,000. Each Sunrise board has a variable cost of $250 per unit.
Big Wave Corporation sells two types of surfboards. They sell the Sunrise for $1,000. Each Sunrise board has a variable cost of $250 per unit. They also sell the Sunset surfboard. They believe they can sell each Sunset board for $1,500 and estimate it will cost $500 to make each board. The company expects to incur $1,400,000 in fixed expenses. Initial sales estimates indicate that Big Wave customers will buy 1 Sunset board for every 4 Sunrise boards.
What is Big Wave's break-even point in units for Sunrise boards and Sunset boards?
What is Big Wave's break-even point in sales dollars?
If Big Wave has a target profit of $1,000,000, how many Sunrise boards and Sunset boards must they sell?
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