Dexter company makes cricket bats. Analysis of financial records for the current year reveals the following

Average selling price $150

direct material $60.00

direct Labour $25

variable cost $15

Annual fixed costs

selling $22,000

administrative $48,000

Melissa companies president has asked you to help her answer the following questions

a) what is the breakeven point in number of bats and in dollars (3 Marks)

b) how much revenue must be generated to produce $80,000 earnings how many bats put this level of revenue represent (2 Marks)

c) Melissa is considering purchasing a new faster machine which will save $12.00 per bat in cost and will raise annual fixed costs by $8000. She expects to make and sell an additional 5000 bats should she make this investment (3 Marks)

d) a marketing consultant told Melissa that she could increase number of bats sold by 30% if she would lower the selling price by 10% and spend $20,000 on advertising. She has been selling 3000 bats, should she make these two related changes? (3 Marks)