Hospital Supply, Inc.^*

Hospital Supply, Inc., produced hydraulic hoists that were used by hospitals to move bedridden patients. The costs of manufacturing and marketing hydraulic hoists at the company's normal volume of 3,000 units per month are shown in Exhibit 1.

This case provides you with the opportunity to identify fixed and variable costs associated with a product, and allows you to set anticipated production levels based on those costs. In this case you will need to:

• Identify the fixed and variable components of the HydraulicHoist
• Determine what the cost of not producing goods would be to the firm
• Determine the potential lost revenue and profit for obsolete goods at various price levels
• Determine what the volume and revenue break-even point would be for the Hydraulic Hoist
• Explainhowknowledgeofthebreak-evenpointandsalesprojectionscanhelpthefirmdetermineiftheyshouldshutdownorproducegoods
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