Superior manufacuring produced and sold 50,000 Temperature gauges last year for

Question

Superior manufacuring produced and sold 50,000 Temperature gauges last year for $ 42 each. This level of activity amouned to 80 percent of the firm's total productive capacity the cost related to thislevel of activity follow

                                              Manufacturing             Slling               Administrative      total

unit level                         $ 600,000                 $ 150,000                  $ 0                       $750,000

Facility level                   $ 200,000                   180,000            600,000                    980,000

please answer A B and C

A how many guages must it sell to break even

B compute last year income or loss from sales of temperature gauges

c considiring to A answer at what percentage of total productive capacity must superior operate to acheive a break even point

Explanation / Answer

a) total cost = 750000+980000 = 1730000

for break even , revenue = 1730000

no of gauges = 1730000/42 = 41190

b) income = 50000*42-1730000 = 370000

c) percentage of total productive capacity must superior operate = 41190*0.8/50000 = 0.659 =65.9%

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