Problem 19-01

Management believes it can sell a new product for $7.00. The fixed costs of production are estimated to be $5,000, and the variable costs are $3.00 a unit.

1. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Round your answers to the nearest dollar. Enter zero if necessary. Use a minus sign to enter losses, if any.

   Quantity		Total Revenue	Variable Costs	Fixed Costs	Total Costs	Profits (Losses)
   0		$	$	$	$	$
   500		$	$	$	$	$
   1,000		$	$	$	$	$
   1,500		$	$	$	$	$
   2,000		$	$	$	$	$
   2,500		$	$	$	$	$
   3,000		$	$	$	$	$

2. Determine the break-even level using the above table and use the Exhibit 19.5 to confirm the break-even level of output. Round your answers for the break-even level to the nearest whole number. Round your answers for the fixed costs, variable costs, total costs, and profits (losses) to the nearest dollar. Enter zero if necessary. Use a minus sign to enter losses, if any.

   Quantity	Total Revenue	Variable Costs	Fixed Costs	Total Costs	Profits (Losses)
   	$	$	$	$	$

3. What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would be $10,500 instead of $5,000? Round your answer for the break-even level of output to the nearest whole number.

   If fixed costs were $10,500 instead of $5,000 the total revenue schedule -Select-increases decreases does not change Item 42 and the total cost schedule -Select-increases decreases does not change Item 43 .

   The new break-even level of output is units.