Problems Module 4.docx - Tabitha L Dillay BUS 3710-A3 Problems(Chapter 5 2 Due Friday The Hartnett Corporation manufactures baseball bats with Pudge

Problems Module 4.docx - Tabitha L Dillay BUS 3710-A3...

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Tabitha L Dillay BUS 3710-A3 Problems (Chapter 5) Due: Friday 2.) The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez’s autograph stamped on them. Each bat sells for $35and has a variable cost of $22. There are $97,500 in fixed costs involved in the production process. a. Compute the break-even point in units BE(Break-Even) = 97500 / 35 - 22 = 7500 units b. Find the sales (in units) needed to earn a profit of $262,500. 97500 + 262500 / 35 - 22 = 360000 / 13 = 27693 Units 5.) Eaton Tool Company has fixed costs of $255,00, sells it’s units for $66, and has variable costs of $36 per unit. a. Compute the break-even point BE = ($255,000) / ($66 - $36) = 8,500. The Break-even point is 8,500 units. b. Ms. Eaton comes up with a new plan to cut fixed costs to $200,000. However, more labor will now be required, which will increase the variable costs per unit to $39. The sales price will remain at $66. What is the new break-even point? BE = ($200,000) / ($66 - $39) = 7,407. The Break-even point is 7,407 units. c. Under the new plan, what is likely to happen to profitability at very high-volume levels (compared to the old plan)?
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