The Brewer Company manufactures and sells pens. Currently, 5,400,000 units are sold per year at $ 0.60 per unit. Fixed costs are $ 860,000 per year. Variable costs are $ 0.40 per unit. Consider each case separately:

1a. What is the current annual operating income?
1b. What is the present breakeven point in revenues? Compute the new operating income for each of the following changes:
2. A $ 0.06 per unit increase in variable costs.
3. A 20% increase in fixed costs and a 20% increase in units sold.
4. A 40% decrease in fixed costs, a 40% decrease in selling price, a 30% decrease in variable cost per unit, and a 35% increase in units sold. Compute the new breakeven point in units for each of the following changes:
5. A 20% increase in fixed costs
6. A 20% increase in selling price and a $ 20,000 increase in fixed costs

  • CreatedJanuary 15, 2015
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