BREAK-EVEN ANALYSIS:Boeing has recently developed the B-787. Development costs were between $40 ($40,000,000,000) billion and $50 ($50,000,000,000) billion. Assuming, production costs (variable costs) are $200,000,000 per aircraft and the selling price is $250,000,000 per aircraft, please answer the following questions:

In 2011, Boeing was producing 2 planes per month. In 2012 production increased to 3 aircraft per month; in 2013 4 planes per month; and in 2014 with the opening of a second plant in South Carolina, 8 planes per month. In 2015, production stabilized at 10 planes per month. The order book as of September 30, 2015 was 900 planes with options for 500 additional planes.

A.How many aircraft must be produced for Boeing to break-even?

High Development Costs______________

Low Development Costs______________

B.When will Boeing break-even (year)?

High Development Costs______________

Low Development Costs______________

C.How manymonthswill it take for Boeing to clear the Order Book______________

D.Start-up costs for a second shift are $100,000,000 per plant. Tooling up and training for a second shift takes one year. 2016 was a very good year for Boeing! The airlines exercised their options for the 500 planes to be delivered within six years. (Assume the options were exercised on January 1, 2017) The penalty for late delivery is a 15% discount per aircraft.

Should Boeing open a second shift? _______ At one or both plants? _______

Why?(Explain your answer) __________________

How soon can production start? _________________

E.Given your production schedule from Part C (Without a second shift), what is the earliest year that Boeing can complete delivery of all 1,400 planes? ______________