Reference no: EM132939411

Question - Svetlana and Yoric are each thinking of starting the same type of business. Svetlana is young and into technology and mechanization. She has a large fixed cost of $15,000, but her advanced production machinery minimizes her labour, resulting in a low unit variable cost of $25. Yoric is a little older and believes the best quality items are handmade. He has a low fixed cost of $8,000 but incurs more labour costs, resulting in a high unit variable cost of $60. Regardless of who makes the product, market research shows that consumers would pay $100 for the product.

Required -

a. Calculate the unit break-even for both Svetlana and Yoric.

b. Calculate the net income or loss for both if unit sales are 50% higher than the break-even point.

c. Calculate the net income or loss for both if unit sales are 50% lower than the break-even point.

d. Comment on your findings from the above solutions.