2009-06-13_025111_mrieger_2 (1)

2009-06-13_025111_mrieger_2 (1) - 12,000 units 15,000 units...

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5) Allison Radios manufactures a complete line of radio and communication equipment for law enforcement agencies. The average selling price of its finished product is $180 per unit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year. a. What is the break-even point in units for the company? $540,000 $180 $126 = - B F Q P V = - = 10,000 units b. What is the dollar sales volume the firm must achieve in order to reach the break-even point? = 10,000 × $180 = $1,800,000 c. What would be the firm's profit or loss at the following units of production sold:
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Unformatted text preview: 12,000 units? 15,000 units? 20,000 units? Allison Radios Unit Sales Price Total Sales Fixed Costs Unit Variable Cost Total Variable Costs Total Costs Total Profit (Loss) 12000 $180 $2,160,000 $540,000 $126 $1,512,000 $2,052,000 $108,000 15000 $180 $2,700,000 $540,000 $126 $1,890,000 $2,430,000 $270,000 20000 $180 $3,600,000 $540,000 $126 $2,520,000 $3,060,000 $540,000 d. Find the degree of operating leverage for the production and sales levels given in part c. Units Contribution Margin EBIT DOL 12000 $648,000 $108,000 6 15000 $810,000 $270,000 3 20000 $1,080,000 $540,000 2...
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