Explore BrainMass

Gattonside Gumbo Company

See attachment for company information. Thanks.

(a) State five assumptions which are made when preparing break-even charts. State one limitation of each assumption.

(b) Using marginal costing, calculate the net profit if
i) 7500 units are produced and sold;
ii) 9000 units are produced and sold.

(c) Calculate the number of units required to break-even.

(d) Calculate the expected profit at full production capacity assuming all production is sold, if selling price is reduced to $9 per unit.

(e) Comment on the possible advantages and disadvantages of lowering a selling price.


Solution Summary

You will find the answer to these puzzling questions inside...