Question

The Warren Watch Company sells watches for $22, fixed costs are $150,000, and variable costs are $13 per watch a. What is the firm's gain or loss at sales of 7,000 watches? Enter loss (if any) as negative value. Round your answer to the nearest cent. What is the firm's gain or loss at sales of 18,000 watches? Enter loss (if 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 if the selling price was raised to $347 d. What would happen to the break-even point if the selling price was raised to $34 but variable costs rose to $20 a unit? Round your answer to the nearest whole number.

Answer 1

Contribution Per unit = Selling Price per unit-Variable cost Per unit 22-13 9 al Profit/(Loss) Sales Units* Contribution Per Unit-Fixed Costs 7000*9-150000 $-87,000.00 a2 Profit/(Loss) Sales Units* Contribution Per Unit-Fixed Costs 18000*9-150000 $ 12,000.00 b Break even Point Fixed Costs/(Selling Price Per unit-Variable cost Per unit) 150000/(22-13) 16667 C Break even Point Fixed Costs/(Selling Price Per unit-Variable cost Per unit) 150000/134-13) 7143 Break even Point Fixed Costs/(Selling Price per unit-Variable cost Per unit) 150000/(34-20) 10714!