Question 9 (6 points)

Figure BEP in units and dollars for the following:

i) A firm expects to sell 60,000 pairs of pants at $12.50 each. The cost of manufacturing and marketing them is $10.00 each. The fixed costs associated with the pants is $15,000.

Calculate the break-even point in units for the pants. _____________________?

Calculate the BEP in $$ : ___________________________?

If they sell all 60,000 pairs, what will the profit be? _____________________?

ii) A firm expects to sell 2,000,000 rubber knobs at $.25 each. The cost of manufacturing and marketing them is $.20 each. The fixed costs associated with the pants is $25,000.

Calculate the break-even point in units for the rubber knobs. _____________________?

Calculate the break-even point in $$ for the rubber knobs. _____________________?

If they sell all knobs, what will the profit be? _____________________?

iii)XYZ Corporation has calculated that it has fixed costs that consist of its lease, depreciation of its assets, executive salaries, and property taxes. Those fixed costs add up to $60,000. Their product is the widget. Their variable costs associated with producing the widget are raw material, factory labor, and sales commissions. Variable costs have been calculated to be $0.80 per unit. The widget is priced at $2.00 each.

What is the break-even point in units? ______________________

What is the break-even point in $$? _______________________