case 1 BA - 1,035,686 units b Duo-Products must make a $1.2...

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a) There is an extra $720,000 a year in fixed costs estimated by Fred Williams for this year.  Since capacity is being expanded to increase production of Product C, it could be assumed that  this increase should be allocated to this product. Production of Product A is to be scaled down,  but as there isn't any information as to whether its relevant range of fixed costs will change, I  have left its level of fixed costs unchanged. As a result both A's and B's breakeven points  remain the same. For C the breakeven point is 354,545 units. The overall breakeven point is 
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Unformatted text preview: 1,035,686 units. b) Duo-Products must make a $1.2 million profit before tax to meet this requirement. To do this it must sell 1,372,494 units. c) An increase in variable costs across the board by 10% would increase the average variable cost to $3.72 per unit. For Duo-Products to break even under these conditions it would need to sell 1,144,440 units. d) Duo-Products would have to sell 1,516,615 units to meet both the extra dividends and expected union requirements....
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