Question

Break-Even Analysis

The Hartnett Corporation manufactures baseball bats with Sammy Sosa’s autograph
stamped on them. Each bat sells for $13 and has a variable cost of $8.
There is $20,000 in fixed costs involved in the production process.

a. Compute the break-even point in units.

Selling price per item= $ 13
Variable cost per bat= $ 8
Contribution margin= 5
Fixed cost…………= 20,000
Breakeven Units=20,000/5= 4,000

b. Find the sales (in units) needed to earn a profit of $15,000

(how do you find the sales in units to earn profits of 15,000?)
Do you increase the selling price or decrease the VC?

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