Engineering estimates show 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 $120 per unit and variable selling expense is expected to be $15 per unit. The fixed costs applicable to the new product are estimated to be $2800 per period and capacity per period is 100 units.
For each of the following, perform a break-even analysis showing
(a) An algebraic statement of
(i) The revenue function,
(ii) The cost function;
(b) Computation of the break-even point
(i) In units,
(ii) In sales dollars,
(iii) As a percent of capacity;
(c) A detailed break-even chart.