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XYZ corporation has calculated that it has fixed costs that consist of its lease, depreciation of its assets, executive salaries, and property taxes. Those fixed costs add up to $60 000. Their product is the widget. Their variable costs associated with producing the widget are raw materials, factory labor and sales commission. Variable costs have been calculated to be $0.80 per unit. The widget price is $2 each.
A) What is the break even point for XYZ Corporation's product, the widget?
B) What will be the break even point if sales increase to 15%?
C) What will be the break even point if sales decrease by 5%?
D) What is the relationship between fixed costs, Variable costs, Price and Volume?
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