Breakeven point-Changing costs/revenues JWG Company publishes Creative Crossword

Question

Breakeven point-Changing costs/revenues JWG Company publishes Creative Crosswords. Last year the book of puzzles sold for $9.61 with variable operating cost per book of $6.86 and fixed operating costs of $38,000 a. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs, if all figures remain the same as for last year? b. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs, if fixed operating costs increase to $41,800 and all other figures remain the same? C. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs, if the selling price increases to $10.12 and all costs remain the same as for last year? d. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs, if the variable operating cost per book increases to $7.37 and all other figures remain the same? e. What conclusions about the operating breakeven point can be drawn from your answers? a. The breakeven point will bebooks. (Round to the nearest integer.) b. The breakeven point will bebooks. (Round to the nearest integer.) c. The breakeven point will be books. (Round to the nearest integer ) d. The breakeven point will bebooks. (Round to the nearest integer.) e. What conclusions about the operating breakeven point can be drawn from your answers? (Select the best answer below.) 0 A. Increases in costs and price raise the operating breakeven point. O B. Increases in costs lower the operating breakeven point, while increases in price decrease it. ° C. Increases in costs raise the operating breakeven point, while increases in price lower it. 0 D. There is no direct relationship between cost, price and operating breakeven point

Explanation / Answer

break even point in units = fixed costs / (sale price per unit - variable cost per unit)

here,

sale price per unit - varialble cost per unit = ($9.61 - $6.86) =>$2.75 for first two sub parts a and b.

for sub part c = $10.12 - 6.86 =.$3.26

for sub part d = $9.61 -7.37 =>$2.24.

e.C. Increase in costs raise the operating break even point, while increases in price lower it.

(in sub part b and d there was increase in cost resulting in increase in break even point)

(in sub part c there was increase in sellinprice resulting in decrease in break even point).

a.The break even point will be ($38,000 / $2.75) 13,818 books b.The break even point will be ($41,800 / $2.75) 15,200 books c.The break even point will be ($38,000 / 3.26) 11,656 books d.The break even point will be ($38,000 / 2.24) 16,964 books

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