Question

NYRB sells pillows to retailers for an average of $30 each. The variable cost of each pillow is $20 and monthly fixed manufacturing costs total $10,000. Other monthly fixed costs of the company total $8,000. NYRB operates in Cleveland, OH but is considering a move to Miami, FL because the weather is nicer. This may cause changes in the selling price, variable costs, and fixed costs. They expect the sales volume to remain the same.

Required:
a. What is the breakeven point in pillows?
b. What is the margin of safety, assuming sales total $60,000?
c. What is the breakeven level in pillows, assuming variable costs increase by 20%?
d. What is the breakeven level in pillows, assuming the selling price goes up by 10%, fixed manufacturing costs decline by 10%, and other fixed costs decline by $100?



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  • CreatedAugust 26, 2013
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