Question
Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are 3,900,000p per year. The
Rosario Company, which is located in Buenos Aires, Argentina, manufactures a component used in farm machinery. The firm's fixed costs are
3,900,000p
per year. The variable cost of each component is
1,600p
, and the components are sold for
3,300p
each. The company sold 5,700 components during the prior year. (
p
denotes the peso, Argentina's national currency. Several countries use the peso as their monetary unit. On the day this exercise was written, Argentina's peso was worth US
$0.104
. In the following requirements, ignore income taxes.)\ Required:\ Compute the break-even point in units.\ Note: Round your answer to the nearest whole number.\ What will the new break-even point be if fixed costs increase by 5 percent?\ Note: Round your answer to the nearest whole number.\ What was the company's net income for the prior year?\ The sales manager believes that a reduction in the sales price to
2,800p
will result in orders for 900 more components each year. What will the break-even point be if the price is changed?\ Note: Round your answer to the nearest whole number.\ Should the price change discussed in requirement 4 be made?\ \\\\table[[1. Break-even point,components],[2. New break-even point,components],[3. Net income,
p
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