Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The manufacturer of a product that has a variable cost of $2.50 perunit and total fixed cost of $125,000 wants to determine the level of

The manufacturer of a product that has a variable cost of $2.50 perunit and total fixed cost of $125,000 wants to determine the level of output necessaryto avoid losses. a. What level of sales is necessary to break even if the product issold for $4.25? What will be the manufacturer's profit or loss on the sales of 100,000units? b. If fixed costs rise to $175,000, what is the new level of salesnecessary to break even? c. If variable costs decline to $2.25 per unit, what is the newlevel of sales necessary to break even? d. If fixed costs were to increase to $175,000, while variablecosts declined to $2.25 per unit, what is the new break-even level of sales? e. if a major proportion of fixed costs were non cash(depreciation), would failure to achieve the break-even level ofsales imply that the firm cannot pay its current obligations asthey come due? suppose $ 100,000 of the above fixed costs of$125,000 were depreciation expense. what level of sales would bethe cash break-even level of sales?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Information For Decisions

Authors: Robert w Ingram, Thomas L Albright

6th Edition

9780324313413, 324672705, 324313411, 978-0324672701

More Books

Students also viewed these Accounting questions

Question

What would your clients like you to do more of/less of?

Answered: 1 week ago

Question

Identification of key stakeholders and decision makers

Answered: 1 week ago