Wava Company manufactures a product that sells for $125 per unit. It incurs fixed costs of $198,000.

Question:

Wava Company manufactures a product that sells for $125 per unit. It incurs fixed costs of $198,000. Variable cost for its product is $81 per unit.
Required
a. Determine the sales volume in units and dollars required to earn the desired profit.
b. Calculate the break-even point assuming fixed costs increase to $308,000.
c. Explain how a fixed cost structure affects risk and the break-even point.