Reference no: EM132965050
Exercise - Early Horizons Day Care Center has fixed costs of $300,000 per year and variable costs of $10 per child per day. If it charges $25 a child per day, what will be its break-even point expressed in dollars of revenue? How much revenue would be required for Early Horizons Day Care to earn $100,000 net income per year?
CASE - The management of Bootleg Company wants to know the break-even point for its new line hiking boots under each of the following independent assumptions. Bootleg Company's sales are $1,100,000. The selling price is $50 pair of boots unless otherwise stated. (Each pair of boots is one unit.)
1. Fixed costs are $300,000; variable cost is $30 per unit.
2. Fixed costs are $300,000; variable cost is $20 per unit.
3. Fixed costs are $250,000; variable cost is $20 per unit.
4. Fixed costs are $250,000; selling price is $40; and variable cost is $30 per unit.
A. Compute the break-even point in units and sales dollars for each of the four independent case.
B. Determine the margin (safety in dollars for cases (a) through (d).
C. Determine the level of sales dollars required achieve a net income of $125,000.
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