P = $100 VC = $60 TFC = $250,000 1.

Calculate the current break-even point in both units and dollars. A production manager is trying to control costs but is faced with the following trade-offs under four different situations:

a. Total fixed costs are reduced by 15%, but unit variable costs will rise by 5%.

b. Unit variable costs are reduced by 10%, but fixed costs will rise by 5%

c. Total fixed costs are reduced by 20%, but unit variable costs will rise by 10%.

d. Unit variable costs are reduced by 15%, but fixed costs will rise by 15%.

Determine the break-even in units and dollars for each different situation and then specify which situation (a, b, c or d) would you recommend she pursue?