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Question - The management of Bootleg Company wants to know the break-even point for its new line hiking boots under each of the following independent assumptions. The selling price is $50 pair of boots unless otherwise stated. (Each pair of boots is one unit.)
1. Fixed costs are $300,000; variable cost is $30 per unit.
2. Fixed costs are $300,000; variable cost is $20 per unit.
3. Fixed costs are $250,000; variable cost is $20 per unit.
4. Fixed costs are $250,000; selling price is $40; and variable cost is $30 per unit.
5. Explain how the profitability of the company can be affected by the movements in Fixed costs and variable costs. You may illustrate using graphs.
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