Ch 3 Ques 2

Use the below table to answer the following questions.

Selling Price = $28.00

					Sales Volume
Fixed Cost			Variable Cost		2,000			3,000			4,000			5,000			6,000
				Profitability
$	20,000		11		$	14,000		$	31,000		$	48,000		$	65,000		$	82,000
	20,000		12			12,000			28,000			44,000			60,000			76,000
	20,000		13			10,000			25,000			40,000			55,000			70,000
	30,000		11			4,000			21,000			38,000			55,000			72,000
	30,000		12			2,000			18,000			34,000			50,000			66,000
	30,000		13						15,000			30,000			45,000			60,000
	40,000		11			(6,000	)		11,000			28,000			45,000			62,000
	40,000		12			(8,000	)		8,000			24,000			40,000			56,000
	40,000		13			(10,000	)		5,000			20,000			35,000			50,000

Required

1. Determine the sales volume, fixed cost, and variable cost per unit at the break-even point.

2. Determine the expected profit if Bright Day projects the following data for Delatine: sales, 4,000 bottles; fixed cost, $20,000; and variable cost per unit, $13.

3. Bright Day is considering new circumstances that would change the conditions described in Requirement B. Specifically, the company has an opportunity to decrease variable cost per unit to $11 if it agrees to conditions that will increase fixed cost to $30,000. Volume is expected to remain constant at 4,000 bottles. Determine the effects on the companys profitability if this opportunity is accepted.