Multiple break-even points, what-if analysis In September 2000, Capetini Ca- LO 5, 6 pacitor Company sold capacitors to its distributors for $250 per capacitor. The sales level of 3000 capacitors per month was less than the single-shift capacity of 4400 capacitors at its plant located in San Diego. Flexible production costs were $100 per capacitor, and capacity-related production costs were $200,000 per month. In addition, flexible selling and distribution support costs are $20 per capacitor and fixed (capacity related) selling and distribution support costs are $62,500 per month.

At the suggestion of the marketing department, Capetini reduced the sales price to $200 in October 2000 and increased the monthly advertising budget by $1 7,500. Sales are expected to increase to 6800 capacitors per month. If the demand exceeds the single-shift capacity of 4400 capacitors, the plant needs to be operated in two shifts. Two-shift operation will increase monthly capacity- related production costs to $310,000.

REQUIRED

(a) Determine the contribution margin per capacitor in September 2000.

(b) Determine the sales level in number of capacitors at which the profit-to- sales ratio would be 10%.

(c) Determine the two break-even points for October 2000.

(d) Determine the sales level in number of capacitors at which the profit-to- sales ratio in October is the same as the actual profit-to-sales ratio in Sep¬ tember. Is there more than one possible sales level at which this equality would occur?

(LO 8)