Question: Consider this case: Defence Dynamics Co. is considering a project that will have fixed costs of $12,000,000. Its sale price will be $32.50 per unit,
Consider this case: Defence Dynamics Co. is considering a project that will have fixed costs of $12,000,000. Its sale price will be $32.50 per unit, and it will have a variable cost per unit of $11.25. Therefore, Defence Dynamics Co, has to sell units to break even on this project (QBE). Defence Dynamics Co.'s marketing sales director doesn't think that the market for the firm's goods is big enough to sell enough units to make the company's target operating profit of $20,000,000. In fact, she believes that the firm will be able to sell only about 150,000 units. However, she also thinks the demand for Defence Dynamics Co.'s product is relatively inelastic, so the firm can increase the sale price. Assuming that the firm can sell 150,000 units, what price must it set to meet the CFO'S EBIT goal of $20,000,000 $235.81 O $280.73 O $224.58 O $258.27 What affects the firm's operating break-even point? Several factors affect a firm's operating break-even point. Based on the scenarios described in the following table, indicate whether these factors would increase a firm's break-even quantity, decrease the break-even quantity, or lead to no change Increase Decrease No Change Only the fixed costs increase. Only the variable cost per unitO The amount of debt increases,OO decreases causing interest expense to increase When other things are held constant, the higher a firm's operating leverage, the will be its business risk
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