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Simmons Kitchens sells small electric knives for $4 each. Variable costs are $2.40 per unit, and fixed costs total $60 000 per year.
Problem a) Write out Simmons' profit equation in terms of knives sold
Problem b) Draw a graph of Simmons' total contribution margin and total fixed cost as volume varies. Locate the break-even point on this graph.
Problem c) Calculate Simmons' break-even point in units
Problem d) What total profit would Simmons expect if it sold 500 000 knives?
Problem e) How many knives would Simmons have to sell to earn $80 000 profit?
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