If the company changes the selling price per clock from

$4,500

to

$5,000

, this will Decrease the breakeven volume from 100 to 83 clocks.\ How small can the selling price be before the grandfather clock ceases to be profitable?

$2,500

per clock\ The relationship between price and the breakeven percentage of maximum production capacity is nonlinear because it is not a straight forward change when increased by 1.\ Raising the selling price to

$5,000

per clock will Increase net profit from

$500,000

to

$650,000

, assuming the variable cost remains

$2,000

and the sales volume is 300 clocks.\ How large can the setting-up costs be before the grandfather clock cease to be profitable? Fixed\ How large can the cost per unit be before the grandfather clocks cease to be profitable? Varible cost\ Now suppose that 300 grandfather clocks are produced but only 200 are sold. Would it still be profitable to produce and sell the grandfather clocks under this circumstance? Yes because the cost of 300 units is

$850,000

and the revenue of selling 200 units is

$900,000

so there is still a profit.\ If 300 grandfather clocks are produced, what would be the minimum amount to be sold in order to break even? 100 units are needed to be hold to meet the breakeven point of 0 .

Transcribed Image Text:

1) If the company changes the selling price per clock from $4,500 to $5,000, this will Decrease the breakeven volume from 100 to 83 clocks. 2) How small can the selling price be before the grandfather clock ceases to be profitable? $2,500 per clock 3) The relationship between price and the breakeven percentage of maximum production capacity is nonlinear because it is not a straight forward change when increased by 1. 4) Raising the selling price to $5,000 per clock will Increase net profit from $500,000 to $650,000, assuming the variable cost remains $2,000 and the sales volume is 300 clocks. 5) How large can the setting-up costs be before the grandfather clock cease to be profitable? Fixed 6) How large can the cost per unit be before the grandfather clocks cease to be profitable? Varible cost 7) Now suppose that 300 grandfather clocks are produced but only 200 are sold. Would it still be profitable to produce and sell the grandfather clocks under this circumstance? Yes because the cost of 300 units is $850,000 and the revenue of selling 200 units is $900,000 so there is still a profit. 8) If 300 grandfather clocks are produced, what would be the minimum amount to be sold in order to break even? 100 units are needed to be hold to meet the breakeven point of 0. 1) If the company changes the selling price per clock from $4,500 to $5,000, this will Decrease the breakeven volume from 100 to 83 clocks. 2) How small can the selling price be before the grandfather clock ceases to be profitable? $2,500 per clock 3) The relationship between price and the breakeven percentage of maximum production capacity is nonlinear because it is not a straight forward change when increased by 1. 4) Raising the selling price to $5,000 per clock will Increase net profit from $500,000 to $650,000, assuming the variable cost remains $2,000 and the sales volume is 300 clocks. 5) How large can the setting-up costs be before the grandfather clock cease to be profitable? Fixed 6) How large can the cost per unit be before the grandfather clocks cease to be profitable? Varible cost 7) Now suppose that 300 grandfather clocks are produced but only 200 are sold. Would it still be profitable to produce and sell the grandfather clocks under this circumstance? Yes because the cost of 300 units is $850,000 and the revenue of selling 200 units is $900,000 so there is still a profit. 8) If 300 grandfather clocks are produced, what would be the minimum amount to be sold in order to break even? 100 units are needed to be hold to meet the breakeven point of 0.

Answer rating: 100% (QA)

Analysis of Grandfather Clock Profitability Based on the provided information heres an analysis of the grandfather clocks profitability under differen... View the full answer