Reference no: EM132502212

Subject: WMBA 6050 Accounting for Management Decision Making

Kendall Lane is planning to make a unique toy that promises to keep small children entertained for hours. Kendall believes that parents everywhere will want to buy this toy. With a selling price of $25, Kendall now needs to determine the costs and the required number of toys needed to be sold before earning a profit, the break-even point.

After researching the costs to produce the toy, the following two locations with associated costs have been determined:

1. The rent for the small facility will be $2,600 per month, insurance $600 per month, and other fixed costs are estimated at $1,500 per month. This facility has a capacity to produce 200 toys per month at a variable cost for each toy of $5.00.
2. The rent for a larger facility will be $5,000 per month, insurance $800 per month, and other fixed costs are estimated at $2,000 per month. This facility has a capacity to produce 450 toys per month at a variable cost for each toy of $5.00.

Break Even Analysis Small Facility

• Price
• Variable Costs
• Fixed Cost
• Rent
• Insurance
• Other
• Break-even Quantity

Break Even Analysis Large Facility

• Price
• Variable Costs
• Fixed Costs
• Rent
• Insurance
• Other
• Break-even Quantity

Question 1: How to get the break even quantity for small and large facility.