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# Calculating BEP and total profit in the given case

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RAZ, Inc. is considering launching a project for a 1 week sale of their patented golf clubs on The Home Shopping Network. They have decided if they can make at least a \$1,000 return on the Fixed Costs of \$10,000, they will launch the sale. Your marketing research predicted that total sales, at the \$10.00 per unit price, would be at least 4,500 units. RAZ has provided you with their Direct Labor Costs per unit (\$1.50) and their Material Costs per unit (\$0.75).

a. What is the Break Even Point to cover costs and the \$1,000 profit?

b. What will the total profit be if sales are 4,500 units as forecasted by marketing?

#### Solution Preview

Variable cost per unit=V=direct labor cost per unit+direct material cost per unit=1.50+0.75=\$2.25

Fixed cost=F=\$10,000

Price per unit=P=\$10

Contribution margin ...

#### Solution Summary

The solution describes the steps to calculate break even point and total profit in the given case.

\$2.49