Reference no: EM132976760
Printing Press expects to sell 1,000 books this month. Data on monthly costs are as follows:
Per unit costs:
Selling price $8.00
Variable manufacturing costs $2.75
Variable selling costs $0.25
Total costs:
Fixed manufacturing costs $1,000
Fixed selling costs $125
You have been asked to help the owner evaluate operations through performing a break-even analysis.
Problem a) Determine what the current break-even point is in units
Problem b) The owner is thinking of buying a new printer which will cost $300. What is the new break-even point?
Problem c) Instead of buying a new printer, the owner is thinking of buying paper in bulk which will result in cost savings of $0.75 per unit. What is the new break-even point?
Problem d) Based on the three alternatives (do nothing, purchase the new printer, and buy paper in bulk), what would you suggest the owner do and why?
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