Question 3: 13 Points

Given these Company Performance Data and Variables Fixed costs: $15,000 Variable costs: $1.00 per unit Revenue: $1.60 per unit Effective capacity: 45,000 units per year Effective capacity: 40,000 units per year Anticipated output: 36,000 units per year

a. Determine the Breakeven quantity for production. Be sure to explain in words and steps how this is done. Insert answer here

b. Calculate the Efficiency and Utilization at (i) Breakeven, and (ii) the Anticipated output Be sure to explain in words and steps how this is done. Insert answer here

Background: This Company sells products in a very price sensitive and competitive market. It has realized that to protect itself from economic threats like Covid 19, it should lower the current Breakeven (BE) point calculated in part 3(a) by 20%.

If the firm wants to achieve this reduction by changing one of the variables (a) Fixed Cost or (b) Variable Cost/unit or (c) Revenue/unit.

Identify and describe which variable you would recommend should be changed. Explain and discuss why you selected a particular variable.

c. Support your analysis and arguments by first determining the ?? values for the table below. Be sure to explain in words and steps how this is done.

This table will show the new variable values and the percent (%) change for each variable that would be needed to achieve the reduced BE target Insert answers here

d. Identify and describe which variable you would recommend should be changed to achieve the lower BE target. Explain and discuss why would you selected a particular variable. Insert answer here