Question: To Solve 5-3 and 5-4

Problem 5-3

The management of Bootleg Company wants to know the break-even point for its new line of boots under each of the following independent assumptions. The selling price is $50 per pair of boots unless otherwise stated. (Each pair of boots is one unit.)

• Fixed costs are $300,000; variable cost is $30 per unit
• Fixed costs are $300,000; variable cost is $20 per unit
• Fixed costs are $250,000; variable cost is $20 per unit
• Fixed costs are $250,000; variable cost is $40 per unit; and variable cost is 30 per unit.

Compute break even points in units and sales dollars for each of the four independent cases

Problem 5-4

Refer to 5-3 Bootleg company sales are $1,100,000. Determine the margin of safety in dollars for cases (a) through (d)