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Auto Tires, Inc. sells tires to service stations for an average of $55 each. The variable costs of each tire is $35 and monthly fixed manufacturing costs total $25,000.
Other monthly fixed costs of the company total $15,000.
Required:
Problem a. What is the break-even level in tires?
Problem b. What is the margin of safety, assuming sales total $135,000?
Problem c. What is the break-even level in tires, assuming variable costs increase by 42.85 percent?
Problem d. What is the break-even level in tires, assuming the selling price goes up by 16 per unit , fixed manufacturing costs decline by 10 percent and other fixed costs decline by $1500?
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