Purchase Solution

Break-Even Analysis Managerial Finance

Not what you're looking for?

Ask Custom Question

Ensco Lighting Company has fixed costs of $100,000, sells its units for $28, and has variable costs of $15.50 per unit.

a. Compute the break-even point.
b. Ms. Watts comes up with a new plan to cut fixed costs to $75,000. However,
more labor will now be required, which will increase variable costs per unit
to $17. The sales price will remain at $28. What is the new break-even point?
c. Under the new plan, what is likely to happen to profitability at very high
volume levels (compared to the old plan)?

Purchase this Solution

Solution Summary

This solution is comprised of a detailed explanation to compute the break-even point.

Solution Preview

Break-even analysis Managerial Finance I
Ensco Lighting Company has fixed costs of $100,000, sells its units for $28, and has variable costs of $15.50 per unit.

a. Compute the break-even point.

Find the contribution margin per unit.

Contribution margin per unit = Unit price - Variable cost per unit
= 28 - 15.50
= 12.50 per ...

Purchase this Solution


Free BrainMass Quizzes
Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Motivation

This tests some key elements of major motivation theories.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.