Operations Management Chapter 5 - Exercises and Solutions 1. A producer of pens has received a forecast of demand of 30,000 pens for the coming month from its marketing department. Fixed costs of $25,000 per month are allocated to the operation, and variable cost is 37 cents per pen. a. Find the break-even quantity if pens sell for $1 each. b. At what price must pens be sold to obtain a monthly profit of $15,000, assuming the forecasted demand? c. What profit would be realized on a monthly volume of 52,000 units and the price of $1? 2. A pottery manufacturer is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents. a. What volume per month is required in order to break even? b. What profit would be realized on a monthly volume of 61,000 units? 87,000 units? c. What volume is needed to obtain a profit of $16,000 per month? d. What volume is needed to provide a total revenue of $23,000 per month