Question
Engler Corporation manufactures specialized blades. Last year the company manufactured and sold 25,000 blades. It can manufacture an additional 10,000 blades without adding new machinery
Engler Corporation manufactures specialized blades. Last year the company manufactured and sold 25,000 blades. It can manufacture an additional 10,000 blades without adding new machinery and equipment (i.e. fixed costs). Its total estimated cost for the 25,000 units it made last year are as follows:
Direct Material (variable) | $250,000 |
Direct labor (variable) | $375,000 |
Manufacturing Overhead |
|
Variable portion | $62,500 |
Fixed portion | $55,000 |
Selling and Administrative |
|
Variable portion | $50,000 |
Fixed portion | $35,000 |
What is the break-even price for the blades this year (given a production forecast of 30,000 blades)?
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