Explore BrainMass

Explore BrainMass

    Break-Even Analysis

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    (See attached file for full problem description)

    ---
    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?

    The problem below is a sample problem, can you please walk me through this step by step?

    Therapeutic Systems sells its products for $8 per unit. It has the following costs:
    Rent $120,000
    Factory labor $1.50 per unit
    Executive salaries $112,000
    Raw material $.70 per unit
    Separate the expenses between fixed and variable costs per unit. Using this information
    and the sales price per unit of $6, compute the break-even point.

    ---

    (See attached file for full problem description)

    © BrainMass Inc. brainmass.com June 3, 2020, 6:04 pm ad1c9bdddf
    https://brainmass.com/business/business-and-industry-analysis/break-even-analysis-46646

    Attachments

    Solution Preview

    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?

    If we need to earn a profit, this figure is simply added to the fixed costs and the new number of units found out ( we do not change the selling price or the variable costs since these are given and cannot be ...

    Solution Summary

    The solution has various problems relating to breakeven calculations.

    $2.19

    ADVERTISEMENT