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Problem 2: Frontier Patio (CVP Analysis[ The following are Frontier Patio's unit costs and prices at production and sales volume of 140,000 outdoor urns per
Problem 2: Frontier Patio (CVP Analysis[ The following are Frontier Patio's unit costs and prices at production and sales volume of 140,000 outdoor urns per year: Per unit Selling Price $10 Manufacturing Costs: Direct Materials $2.50 Direct Labor $2.90 Variable OH $1.40 Fixed OH $0.80 Selling and other costs: Variable $0.20 Fixed $1.90 (Note that per unit Fixed 0H and Fixed Selling costs provided above are assuming a production volume of I 40, 000 urns. Whereas xed costs per unit will change with production volume, remember that to tal xed costs will not change with changes in production volume.) Assume that Frontier Patio believes that actual sales volume is uniformly distributed over the rang [80,000 , 160,000]. a) How many urns does Frontier need to sell to breakeven? (2 points) b) What is the likelihood that Frontier will lose more than $15 ,000? (2 points) c) What is the likelihood that Frontier will earn profits that are at least 5% of revenues? (2 points)
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