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Please solve all parts by hand 3. Headline Enterprises will be producing a new line of baseball caps in the coming years. It has the
Please solve all parts by hand
3. Headline Enterprises will be producing a new line of baseball caps in the coming years. It has the choice of producing the caps in a small factory with a large number of workers or a large factory with a small number of workers. Each cap will be sold for $10. If the small factory is selected, per-unit variable cost will be $7.00. If the large factory is selected, per-unit variable cost will be $3.50. The small factory will have fixed operating costs of $600,000, of which $100,000 is depreciation. The large factory will have fixed operating costs of $2,300,000, of which $300,000 is depreciation a. What is the operating breakeven point in units and dollar sales for the small factory? b. What is the operating breakeven point in units and dollar sales for the large factory? c. Develop a breakeven chart for the small factory. Label all schedules and axes. Be certain to identify dollar fixed costs and the operating breakeven in units and dollars on your chart. d. What is the cash breakeven point in units and dollar sales for the small factory? e. What is the cash breakeven point in units and dollar sales for the large factory? f. What level of output generates identical EBIT for both factories? (That is, at what level of units sold do both factories generate the same EBIT and what is that crossover level of EBIT?) g. What is the DOL of the small factory at the crossover level of EBIT from part f? h. What is the DOL of the large factory at the crossover level of EBIT from part fStep by Step Solution
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