12-4. (Break-even point and operating leverage) Footwear Inc. manufactures a complete line of men’s and women’s dress shoes for independent merchants. The average selling price of its finished product is $85 per pair. The variable cost for this same pair of shoes is $58. Footwear Inc. incurs fixed costs of $170,000 per year. a) What is the break-even point in pairs of shoes sold for the company? b) What is the dollar sales volume the firm must achieve to reach the break-even point? c) What would be the firm’s profit or loss at the following units of production sold: 7,000 pairs of shoes? 9,000 pairs of shoes? 15,000 pairs of shoes?
12-4. (Break-even point and operating leverage) Footwear Inc. manufactures a complete line of men’s and women’s dress shoes for independent merchants. The average selling price of its finished product is $85 per pair. The variable cost for this same pair of shoes is $58. Footwear Inc. incurs fixed costs of $170,000 per year. a) What is the break-even point in pairs of shoes sold for the company? b) What is the dollar sales volume the firm must achieve to reach the break-even point? c) What would be the firm’s profit or loss at the following units of production sold: 7,000 pairs of shoes? 9,000 pairs of shoes? 15,000 pairs of shoes?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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12-4. (Break-even point and operating leverage) Footwear Inc. manufactures a complete
line of men’s and women’s dress shoes for independent merchants. The average selling price
of its finished product is $85 per pair. The variable cost for this same pair of shoes is $58.
Footwear Inc. incurs fixed costs of $170,000 per year.
a) What is the break-even point in pairs of shoes sold for the company?
b) What is the dollar sales volume the firm must achieve to reach the break-even point?
c) What would be the firm’s profit or loss at the following units of production sold: 7,000
pairs of shoes? 9,000 pairs of shoes? 15,000 pairs of shoes?
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