Wednesday

August 20, 2014

August 20, 2014

Posted by **Zoey** on Saturday, February 18, 2012 at 1:23pm.

Engineering estimates indicate that the variable cost of manufacturing a new product will be $35 per unit.Based on market research, the selling price of the product is to be $72 per unit and there is an additional selling expense which is estimated to cost the company $10 per unit. The fixed costs applicable to this new product are budgeted at $4,800 per period and the initial production capacity is 430 units. Given this information determine the following:

a) The breakeven point as a percent of capacity (rounded to the nearest percent) if the fixed costs are reduced from the original amount by $160 and the variable cost of manufacturing is increased to $39 per unit.

b) The breakeven point in dollars if the selling price is increased to $85 per unit and all other values are as originally stated.

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