Question

BREAK EVEN ANALYSIS The Warren Watch Company sels watches for $25, fixed costs are $195,000, and variable costs are $14 per watch. a. What is the firm's gain or loss at sales of 5,000 watches? Enter loss (if any) as negative value. Round your answer to the nearest cent. What is the firm's gun or loss at sales of 20,000 watches? Enter loss (any) as negative value. Round your answer to the nearest cent b. What is the break-even point (unit sales)? Round your answer to the nearest whole number units c. What would happen to the break even point of the seling price was raised to $337 --Select- d. What would happen to the break-even point the selling price was raised to $33 but variable costs rose to $28 a unit? Round your answer to the nearest whole number

Answer 1

Selling psice = 2 fiud costs = 1,95.000 Vasiable cost if fism Sells 5000 watches if Sells 2000D_watches Sales 5000 x 25 = 125.000 20 000 x2S : S, 000 Vasiable cost 5000 x H FO DOD 20000 x 14 29.80000 Contribution 55 000 9.20.000 A) 1.95000 195.000 fired cost profit (lon] (1.40.000 85.000 . if 5000 watches sold then then loss of proft of 1,40.000 25.000 if 20000 watched sold are 07:00 PM TO 05:00 fixed cost / contribution pes unit Break even point contribution par unit. i selling prices - vesiable cost = 25-16 = 11 Breakeven point = 195.000 / 217,72 2#units L if selling price = 33 then contribution per unit : 33-14 = 19. Then Bleak even point = 1,95.000 19 = 10.863•16 units O P then Selling price - 33 Contributin per unit and Variable cost = 28. = 33-28 = 5. Break even point increases