Exercise 3-7A Cost-Volume-Profit Relationship

Casey Corporation is a manufacturing company that makes small electric motors it sells for $25 per unit. The variable costs of production are $10 per motor, and an annual fixed costs of production are $390,000.

A) How many units of product must Casey make and sell to break even?

B) How many units of product must Casey make and sell to earn a $114,000 profit?

C) The marketing manager believes that sales would increase dramatically if the price were reduced to $20 per unit. How many units of product must Casey make and sell to earn a $114,000 profit, if the sales price is set at $20 per unit?