Question
Kristin, a carpenter, has the capacity to produce and sell 84 tables per year at $3000 each. The variable costs are $1000 per table and
Kristin, a carpenter, has the capacity to produce and sell 84 tables per year at $3000 each. The variable costs are $1000 per table and the fixed costs are $60,000 per year. Given this information, answer the following: a) Compute the break-even volume and show your calculator entries below, including the answer. FC = 60000 VC = 1000 P = PFT = Q = b) If sales were at 25% of capacity, would there be a profit or loss, and of what amount? Profit or loss? Amount = c) If she reduced the price to $2400 because the variable costs were reduced by 10% per unit, calculate the new break-even volume. Show your calculator entries below, including the answer. FC = VC= P = PFT = Q = d) If the fixed costs increase to $65,000 and the variable costs are $1080 per unit, what price would the table have to be sold at to break even with 62 units sold? Show your calculator entries below, including the answer. FC = VC= P = PFT = Q =
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