1. The present yearly net operating loss is $73,500.
Net operating Profit/(loss) = (Selling Price × No. of units sold) - [(Variable Cost × No. of units sold) + Fixed Cost]
Net Profit/Loss = 2362200
- (1600200
+ 835500
)
Net Loss = (-$73,500).
2. The present break even point in unit sales is <u>27,850 units</u> and <u>$25,90,050
</u> in dollar sales.
Break Even Point = Fixed Costs / (Sales price per unit - Variable Cost per unit)
= $835,500/($93 -$63)
= 27,850 units
Break Even Sales = Break Even Point × Selling Price per unit
= 27,850 × 93
= 2590050
3. The company can earn a maximum profit of <u>$15,700</u> if the company sells <u>30,400</u>
units at <u>$91</u> per unit.
Net operating Profit/(loss) = (Selling Price × No. of units sold) - [(Variable Cost × No. of units sold) + Fixed Cost]
Net Profit/Loss = 2766400
- (1915200
+ 835500
)
Net Profit = 15700
4. The new break even point in unit sales is <u>29,839 units</u> and <u>$27,15,375
</u> in dollar sales.
Break Even Point = Fixed Costs / (Sales price per unit - Variable Cost per unit)
= $835,500/($91 -$63)
= 29839.28571
units or 29,839 units approximately
Break Even Sales = Break Even Point × Selling Price per unit
= 29,839 × 91
= $27,15,375
.
