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Assume that JTI's annual fixed costs for luggage line are $500,000 and its variable cost per luggage set is $100.

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Assume that JTI's annual fixed costs for luggage line are $500,000 and its variable cost per luggage set is $100.

1) compute JTI's break even point for the number of luggage sets and dollars of sales.

2) suppose JTI plans to sell 3,600 luggage sets in 2008. compute JTI's projected operating profit.

3) suppose JTI increased its fixed costs by $100,000 and reduced variable costs per luggage by $25. compute its operating profit if 3,600 luggage sets are sold. comput the break even point.

4) next, ignore requirement 3. suppose fixed costs do not change, but variable costs increase by 15% before deliveries of luggage sets begin for the year. compute the new break even point.

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Assume that JTI's annual fixed costs for luggage line are $500,000 and its variable cost per luggage set is $100.

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Dear Student,

I think the set price is missing here, therefore I would assume that Set Price P = $600 (you can substitute the one that you have).

(1) Break even point = Fixed costs/(Set Price - Variable Cost ...

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