Question
Cruces Manufacturing Inc. is making two products A and B at its plant location in Las Cruces, NM. The cost data for the two products
Cruces Manufacturing Inc. is making two products A and B at its plant location in Las Cruces,
NM. The cost data for the two products are in the table below.
A | B | |
Selling price | $60 | $50 |
Variable cost | $30 | $25 |
Fixed cost/quarter | $30,000 |
a. Assuming the number of product A is equal to 3 times the number of product B, determine
the breakeven in $.
b. If the company made 4,500 units of A and 1,500 units of B respectively during the last
quarter, what is the profit made?
c. Assume this quarter the company is planning on making only product A, what would be
the breakeven volume in number of units of A?
d. Assume this quarter the company is planning on making only product B and the fixed cost
has increased from $30,000 to $40,000, what would be the breakeven volume in number
of units of B? Please show your work in details.
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