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Rodeo Company manufactures an electronic device. The company's plant in Kitchener has an annual capacity of 40,000 units. Rodeo currently sells 30,000 units annually at
Rodeo Company manufactures an electronic device. The company's plant in Kitchener has an annual capacity of 40,000 units. Rodeo currently sells 30,000 units annually at a selling price of $140 per unit. The company's cost structure is as follows Manufacturing cost: *Variable cost (per unit) . Fixed (annually) S60 $840,000 Marketing and distribution cost: * Variable cost (per unit) * Fixed (annually) $20 $600,000 Consider the following parts independently. A. Calculate the breakeven volume in units and in dollars. B. If Rodeo wants to sell 40,000 units annually, it must reduce the selling price per unit to S132.00 and increase annual fixed cost. Variable cost per unit will stay unchanged. Calculate the maximum increase in annual fixed cost for which Rodeo will find it worthwhile to reduce the selling price C. Rodeo is considering adding new features to the product. The changes will increase the annual fixed manufacturing cost by $120,000 and variable manufacturing cost by $2.40 per unit. Calculate the minimum selling price (at a sales quantity of 40,000 units) above which Rodeo will find it worthwhile to add the new features
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