S7.9. Smithson Cutting is opening a new line of scisors for supermarket distribution. It estimates its fixed cost to be $500.00 and its variable cost to be $0.50 per unit. Selling price is expeted to average $0.75 per unit.
a) What is Smithson's Break-even point in units ?
b) What is the break even point in dollars ?
S7.12. Markland Manufacturing intends to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendors have presented proposals. The fixed cost for proposal A are $50.000, and for proposal B, $70,000. The variable cost for A is $12,00, and for B, $10.00. The revenue generated by each unit is $20.00.
a) What is the break-even point in units for a proposal A ?
b) What is the break-even point in units for proposal B?
This solution helps explore the concept of break even and capacity planning for Smithson Cutting and Markland Manufacturing.