Bavarian Sausage is considering starting the production of a new chocolate filled sausage. The company is not sure yet what the exact sales potential and costs of the product will be. Bavarian Sausage has determined the following three possible scenarios:

1. By how much would Bavarian Sausage's breakeven point change in the best case scenario if variable cost increase by $2?

2. By how much would Bavarian Sausage's breakeven point change in the most likely scenario if the price/unit turns out to be only $6?

3. What is the percentage change in Bavarian Sausage's breakeven point in the worst case scenario if it turns out that they can charge $5 per unit?

Transcribed Image Text:

Price/unit Variable cost/unit Fixed costs Best case $ 10 $3 $4,000 Most likely $7 $3 $4,500 Worst case $4 $3 $5,000 Price/unit Variable cost/unit Fixed costs Best case $ 10 $3 $4,000 Most likely $7 $3 $4,500 Worst case $4 $3 $5,000

Answer rating: 100% (QA)

1 Old 400010 3 572 New 400010 5 800 ... View the full answer