prof posted incorrect solutions. Please help

3. FlyCar is planning to produce a car that costs $4.000 to produce. They also plan to pay their salespeople $1000 commission for each unit sold. The price of the car will be $1000. Their xed costs are about $100,000 per year. Their marketing team is estimating that they will be able to sell about 1.000 car per year. Should FIyCar oontinue with this venture? Answer: The question is asking us to understand whether FlyCar will ever be able to recuperate their fixed costs. To answer this question, let's begin by nding out the CM per unit. VG = $4,000 + $1,000 = $5,000 CM = Price - VG = $1000 - 55,000 = $2,000 Total CM = $2.000 x 1.000 = $200,000 Question is: is Total CM :- Fixed Cost? Answer: Total CM = $200,000 :- Fixed Cost = $100,000 So, FlyCar should continue with this venture, as they will end up breaking even, and making prots. 4. While planning to produce their car. FIyGar {from question 3} learned that one oi the employees responsible from gathering their cost structure information made a couple mistakes. In fact. their cost to produce the car was 20% more than the original number of $4.000. Furthermore. the estimated fixed costs were 25% higher than the original number. Based on this new information. should FIyCar still continue with this venture? Answer: Original Cost of Production I $4,000; Percentage Change == 20% New Cost of Production = $4,000 * 1.2 = 54,000 New 1il'ariahile l[frosts = $4,000 + $1,000 = $5,000 New CM = 5?.000 - 55,000 = $1.200 Total CM = 1000 K $1,200 = $120,000 Original Fixed oats = $100,000: Percentage Change = 25% New Fixed Costs = $100,000 * 1,25 = $125,000 Question is: is Total CH :- Fixed Costs? Answer: Total CM = $120,000