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geniusboy [140]
3 years ago
11

Target Profit Outdoors Company sells a product for $110 per unit. The variable cost is $65 per unit, and fixed costs are $288,00

0. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $54,720.
Business
1 answer:
STatiana [176]3 years ago
7 0

Answer:

Results are below.

Explanation:

Giving the following information:

Target Profit Outdoors Company sells a product for $110 per unit. The variable cost is $65 per unit, and fixed costs are $288,000.

<u>To calculate the break-even point in units, we need to use the following formula:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 288,000 / (110 - 65)

Break-even point in units= 6,400

<u>Now, we incorporate the desired profit in the formula:</u>

Break-even point in units= (fixed costs + desired profit) / contribution margin per unit

Break-even point in units= (288,000 + 54,720) / 45

Break-even point in units= 7,616 units

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Change in price  = 0.285714

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Elasticity of Supply = -0.153846 / 0.285714 = -0.5385

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I used an excel spreadsheet to record this transactions on an accounting equation.  

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Download pdf
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