What is the new break-even point

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Question - Eaton Tool Company has fixed costs of $210,600, sells its units for $58, and has variable costs of $32 per unit.

Required -

a. Compute the break-even point.

b. Ms. Eaton comes up with a new plan to cut fixed costs to $160,000. However, more labor will now be required, which will increase variable costs per unit to $35. The sales price will remain at $58. What is the new break-even point?

c. Under the new plan, what is likely to happen to profitability at very high volume levels (compared to the old plan)?

Reference no: EM133104845

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