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What is smithson break-even point in units

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1.Smithson Cutting is opening a new line of scissors for supermarket distribution. It estimates its fixed cost to be $500.00 and its variable cost to be $0.50 per unit. Selling price is expected to average $0.75 per unit.

a) What is Smithson's break-even point in units?

b) What is the break-even point in dollars?

2.Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed costs for proposal A are $50,000, and for proposal B, $70,000. The variable cost for A is $12.00, and for B, $10.00. The revenue generated by each unit is $20.00.

a) What is the break-even point in units for proposal A?

b) What is the break-even point in units for proposal B?

c) What is the break-even point in dollars for proposal A if you add $10,000 installation to the fixed cost?

d) What is the break-even point in dollars for proposal B if you add $10,000 installation to the fixed cost?

e) At what volume (units) of output would the two alternatives yield the same profit?

Reference no: EM132908563

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