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QUESTION
A company has fixed costs of $300,000 and produces one product with a selling price of $72.00 and a variable cost of $42.00 per unit. The maximum factory capacity is 20,000 units and it anticipates se
A company has fixed costs of $300,000 and produces one product with a selling price of $72.00 and a variable cost of $42.00 per unit. The maximum factory capacity is 20,000 units and it anticipates selling 15,000 units. Construct a break-even chart showing the break-even point and the margin of safety at present. Fully label your diagram.
How much profit will they make:
- at the present level of operation?
- if sales increase to the maximum that the factory can supply?
