Question: Please give some explain, not only the answer. Thank you! The Cushelle Company operates and services snack vending machines located in restaurants, gas stations, factories,
The Cushelle Company operates and services snack vending machines located in restaurants, gas stations, factories, etc. The machines are rented from the manufacturer. In addition, Cushelle must rent the space occupied by its machines. The following expense and revenue relationships pertain to a contemplated expansion program of 20 machines. Fixed monthly expenses: Machine rental: 20 machines @26.75 = 535 Space rental: 20 locations @14.40 = 288 Wages to service the additional 20 machines 726 Other fixed costs 41 Total monthly fixed costs 1,590 Other data: Per Unit & % of Sales Selling price 0.50@100% Cost of snack 0.40 @ 80% Contribution margin 0.10 @ 20% These questions relate to the above data unless otherwise noted. Consider each question independently. a) What is the monthly break-even point in sales revenue and in number of units? b) If 20,000 units were sold, what would be the company's profit? c) If the cost of the space rental were doubled, what would be the monthly break-even point in sales revenue and in number of units? d) If, in addition to the fixed rent, the vending machine manufacturer was also paid 1p per unit sold, what would be the monthly break-even point in sales revenue and in number of units? (Refer to the original data). e) If, in addition to the fixed rent, the machine manufacturer is paid 1p for each unit sold in excess of the break-even point, what would the new profit be if 20,000 units were sold? (Refer to the original data). f) Discuss the major limitations of break-even analysis
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