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CVP analysis and decisions: manufadurer L018.5 Lucid Images Ltd manufactures premium high definition televisions. The m's xed costs are $4 000 000 per year. The variable cost of each TV is $2000, and the TVs are 50ld for $3000 each. The company sold 5000 TVs during the previous year. (In the following requirements, ignore income taxes.)
Problem 1. Calculate the break-even point in units.
Problem 2. What will the new break-even point be if fixed costs increase by 10 per cent?
Problem 3. What was the company's net profit for the previous year?
Problem 4. The sales manager believes that a reduction in the sales price to $2500 will result in orders for 1200 more TVs each year. What will the break-even point be if the price is changed?
Problem 5. Should the price change discussed in requirement 4 be made? Explain.
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