Reference no: EM132833831

Question - Vaillancourt Ltd. manufactures and sells stylishly patterned face masks for protection against infection. Each mask costs $1.50 in materials, and $1.00 in hands-on labour to properly assemble the mask. Fixed costs for this company will total $55,000 for the coming year.

a. If the current selling price of the mask is $5.00, find the company's current breakeven point, in both units (masks) and in sales dollars.

b. If the company can bring the materials cost down to $1.25 per mask, how will that affect the breakeven point? Answer showing specific unit quantity.

c. Return to the original data as given at the beginning of the problem, and your answer to part a above. In order to cut its breakeven point in half, at what price would each mask need to be sold?

d. Again, returning to your original data, and your answer to part a above, Vaillancourt faces a tax rate of 36%. The president would like to see an after-tax profit of $40,000 in the coming year. At the current price of the masks, how many would need to be sold to achieve this profit goal?

e. If Vaillancourt wants to reduce pressure on its manufacturing facility, by producing 20% fewer masks than your answer to part d, but still make the same $40,000 after-tax profit, at what price would the masks need to be sold?