Thumper is a small business that currently sells a single product, gluten-free bread, for \(\$ 6\) per loaf. The variable cost per loaf is \(\$ 4\). Thumper's fixed cost totals \(\$ 6000\).

Required:

a Calculate the following amounts for Thumper's business:

i contribution margin per loaf ii break-even point in loaves iii the profit that Thumper will earn at a sales volume of 25000 loaves iv the number of loaves that Thumper must sell to earn a profit of \(\$ 16000\)

b Thumper is considering increasing its total fixed cost to \(\$ 8000\) and then also increasing the selling price of its product to \(\$ 8\). The variable cost per loaf would remain unchanged. Repeat the calculations from

(a) using this new information. Will this decision be a good one for Thumper? Why or why not?

c Draw a graph with four lines to show the following:

i total contribution margin earned when Thumper sells from 0 to 10000 loaves at a selling price of \(\$ 6\) per loaf ii total contribution margin earned when Thumper sells from 0 to 10000 loaves at a selling price of \(\$ 8\) per loaf iii Thumper's fixed cost total of \(\$ 6000\)

iv Thumper's fixed cost total of \(\$ 8000\)

v Thumper's break-even point in loaves before and after the selling price and fixed cost changes.

d Does the graph support your conclusion in

(b) above? If so, how does it support your conclusion? If not, what new or different information did you get from the graph?