BREAK-EVEN ANALYSIS The Warren Watch Company sells watches for $24, fixed costs
ID: 2791832 • Letter: B
Question
BREAK-EVEN ANALYSIS The Warren Watch Company sells watches for $24, fixed costs are $175,000, and variable costs are $14 per watch. a. 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 17,000 watches? Enter loss (if any) as negative value. Round your answer to the nearest cent b. What is the break-even point (unit sales)? Round your answer to the nearest whole number units c. What would happen to the break-even point if the selling price was raised to $35? -Select d. What would happen to the break-even point if the selling price was raised to $35 but variable costs rose to $23 a unit? Round your answer to the nearest whole number. Select-Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars Amount a) Selling price per unit 24.00 Variable cost per unit (14.00) Contribution per unit = 24 - 14 10.00 No of units 5,000.00 Total contribution = 5000*10 50,000.00 Fixed costs (175,000.00) Gain (Loss) = 50000 - 175000 (125,000.00) 17000 Units Contribution per unit = 24 - 14 10.00 No of units 17,000.00 Total contribution = 17000*10 170,000.00 Fixed costs (175,000.00) Gain (Loss) = 170000 - 175000 (5,000.00) b) Contribution per unit 10.00 Fixed costs 175,000.00 Break even point in units= 175000/10 17,500.00 c) Selling price per unit 35.00 Variable cost per unit (14.00) Contribution per unit = 35 - 14 21.00 Fixed costs 175,000.00 Break even point in units= 175000/21 8,333 d) Selling price per unit 35.00 Variable cost per unit (23.00) Contribution per unit = 35 - 23 12.00 Fixed costs 175,000.00 Break even point in units= 175000/12 14,583
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