Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show work! To be protitable, a firm has to recover its costs. These costs include both its foxed and its variable costs: One way

Please show work! image text in transcribed
image text in transcribed
To be protitable, a firm has to recover its costs. These costs include both its foxed and its variable costs: One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Blue Mouse Manufacturers is considering a project that will have fixed costs of $12,000,000. The product will be sold for $32,50 per unit, and will incur a variable cost of $12.80 per unit. Given the cost structure of Blue Mouse, it will have to soli units to break even on this project (QaE). Marketing sales director of Alue Mouse Manufacturers doesn't think that the market for the firm's goods is big enough to sell enough units to make the company's target operating profit of $20,000,000, In fact, she believes tha' firm will be able to sell only abeut: 150,000 units. However, she also thinks the demand for Blue Mouse's product is relatwely in suc, so the firm can increase the sale price. Assuming that Blue Mouse can sell 150,000 units, what price must it set to meet the cFo's Eatr 9091 of $20,000,000 ? $226.13 per unit 5237,44 per unit $282.66 per unit $260.05 per unit What affects the firm's operating break-even point? 150,000 units. However, she also thinks the demand for Blue Mouse's product is relatively inelastic, so the firm can increase the sale price: Assuming that Elue Mouse can sell 150,000 units, what price must it set to meet the CFO's FBIT 90al of $20,000,000 ? $226,13 per unit $237.44 per unit $282.65 per unit $260.05 per unit What affects the firm's operating break-even point? Several factors affect a firm's operating break-even point. Based on the scenarios described in the following table, indicate whether these factors would increase, decrease, or leave unchanged a firm's break-even quantity-assuming that only the listed factor changes and all other relevant factors remain constant. When a large percentage of a firm's costs are fixed, the firm is said to have a degree of operating leverage

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Technical Analysis Of Stock Trends

Authors: Robert D. Edwards, John Magee

5th Edition

0910944008, 978-0910944007

More Books

Students also viewed these Finance questions

Question

Understand the primary objectives of performance appraisals

Answered: 1 week ago