Snowbird Snowboards converts regular snowboards to enhance safety capabilities for children. The statement of profit or loss for last year, in which 500 snowboards were produced and sold, appears here.

Required

(a) What volume of snowboards must be sold to earn pre-tax profits of $30 000?

(b) Snowbird’s supplier of snowboards is unable to ship more than 500 boards for the upcoming season. Snowbird has been paying the supplier $85 for each snowboard. (The cost of the snowboards is included in variable production costs.) More expensive snowboards are available from other manufacturers for conversion. If Snowbird’s managers expect to sell more than 500 converted snowboards in the upcoming season, what is the most they would be willing to pay outside suppliers for each additional snowboard?

(c) Suppose Snowbird pays the price you calculated in part (b) and sells an additional 200 snowboards. What is the entity’s incremental profit on these 200 snowboards?

Transcribed Image Text:

Revenue $150 000 Expenses: Variable production costs Fixed production costs Variable selling and administration Fixed selling and administration $60 000 25 000 10000 35 000 130 000 Income $ 20000