Reference no: EM132754897

Question 1: Last quarter, Priya made a loss of $10,000. She sold 10,000 units for $30 apiece. Her fixed expenses totaled $150,000. What was Priya's break-even point in units and dollars? What was her margin of safety in dollars and percentage?

Also, Priya is considering a 10% sales price increase. Assuming sales volume and fixed expenses remain unchanged, what will be the impact on Priya's break-even point and margin of safety?

Question 2: Julio's Jump Ropes' factory is currently at 80% capacity. Julio has noticed there has been steady growth in his company since it started eight years ago.

In a typical year, Julio sells 50,000 jump ropes for $5 each. His total costs are $200,000, of which one-quarter are variable costs. Today, he has received a special offer from an overseas business. The business has offered to buy 500 jump ropes for $2 each.

Should Julio accept the order? Discuss all important assumptions/criteria which must be considered in a decision like this (make a fully developed argument/recommendation).