Breakeven analysis Molly Jasper and her sister, Caitlin Peters into the novelties business almost by accident Molly a talented sculptor, en madere figurines as its for rens Occasionally she and Caitlin would set up a booth at a call and sell a few of the figurines along with jewelry that can made by the demand for the figurines, now called Molycalls grew and the she began to reproduce some of the favorites in resin, using molds of the originals The day came when a buyer for a major department store offered them a contract to produce 1500 figurines of various designs for $10.400 Molly and Caitlin realized that was time to get down to business. To make bekeeping singler Molly had pied all of the urines at $828 Variate operating costs amounted to an average of 16.47 per un to produce the order Molly and Cain would have to rent industrial facilities for a month which would cost them 54.000 a. Calculate Mollycats' operating breakeven point b. Calculate Mollycats' EBIT on the department store order Molly renegates the contractat a price of $10.42 per figurine what will the EBIT be? d. If the store refuses to pay more than 58 28 per un but is willing to negotiate quantity, what quantity of figurines will result in an EBIT of 54,5007 e. At this time, Mollycats come in 15 different varieties Whereas the average variable cost per unit is $6 47 the actual con varies from unito unit What recommendation would you have for Molly and Caitlin with regard to pricing and for the numbers and types of units that they offer for sale? a. The operating breakeven point is uits (Round to the nearest Integer b. Mollycats' EHIT will be (Round to the nearest dollar) c. Molly renegotiates the contract at a price of 510 42 per figurine Mollycats' EBIT will be found to the nearest dolar) d. The necessary number of figurines will be units Round to the nearest Integer e. Al this time Mollycats come in 15 different varieties Whereas the average a ble cost per unit is 56.47 the actual cost varies from unit tout What recommendation would you have for Molly and Caitlin with regard to pricing and for the numbers and types of units that they offer for sale? Select the choices that apply) A they wish to maintain the same price for at units they may need to reduce the selection from the 15 types currently available to a walier number that includes only those that have an average variable cost below 55.28 One tomative is to price the unit y based on the variable cost of the unit Those more costly to produce we have her prices than the less expensive production models DC One motive is to price the units based on the variable cost of the most expensive unit That way they will always make a profit no matter how many units they all W they wish to maintain the same price for all units they may need to reduce the selection to the 15 types currently valable to malier number that includes only those that have an average variable cost below
