A. Prepare a break-even chart. Use this chart to identify:

Bast Company manufactures and sells handcrafted chests. Variable costs per chest are $600, while annual fixed costs amount to $180 000. Each chest is sold for $900. The firms annual capacity is 900 chests.

i. Break-even point, revenue and units

ii. The profit or loss if 300 chests are produced and sold

iii. The profit or loss if revenue is $800 000

iv. The margin of safety if 800 chests are produced and sold

B. The company expects that fixed cost will increase by 5% and variable cost will decrease by $10 per unit.

Using the formula method, compute what revenue would be required to earn a profit of $250 000?