Break-even analysis The Weaver Watch Company sells watches for $22, the fixed co
ID: 2765828 • Letter: B
Question
Break-even analysis
The Weaver Watch Company sells watches for $22, the fixed costs are $135,000, and variable costs are $11 per watch.
What is the firm's gain or loss at sales of 5,000 watches? Enter loss (if any) as negative value. Round your answer to the nearest cent.
$
What is the firm's gain or loss at sales of 18,000 watches? Enter loss (if any) as negative value. Round your answer to the nearest cent.
$
What is the break-even point? Round your answer to the nearest whole.
units
What would happen to the break-even point if the selling price was raised to $33?
-Select one of the following-The result is that the contribution margin decreases. The result is that the break-even point is lower. The result is that the break-even point is higher. The result is that the break-even point remains unchanged. The result is that demand will increase. Item 4
What would happen to the break-even point if the selling price was raised to $33 but variable costs rose to $23 a unit? Round your answer to the nearest whole.
units
Explanation / Answer
Statement showing computations Particulars Amount Selling price per unit 22.00 Variable cost per unit 11.00 Contribution per unit = 22 -11 11.00 Total contribution =5,000*11 55,000.00 Fixed Costs 135,000.00 Income (Loss) (80,000.00) 18,000 Units Total contribution =18,000*11 198,000.00 Fixed Costs 135,000.00 Income (Loss) 63,000.00 BEP in Units = 135,000/11 12,272.73 Selling price per unit 33.00 Variable cost per unit 11.00 Contribution per unit = 33 -11 22.00 BEP in Units = 135,000/22 6,136.36 The result is that the break-even point is lower. Selling price per unit 33.00 Variable cost per unit 23.00 Contribution per unit = 33 -23 10.00 BEP in Units = 135,000/10 13,500.00
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