rating income at a volume of 12,000 units per month with the new cost structure. (2.) Calculate the break-even point in units with the new cost structure.
Preppy Co. makes and sells a single product. The current selling price is $30 per unit. Variable costs are $21 per unit, and fixed expenses total $90,000 per month. Sales volume for July totaled 12,000 units.
(a) Calculate the operating income for July.
(b) Calculate the break-even point in units sold and total revenues.
(c) Management is considering the use of automated production equipment. If this were done,
variable costs would drop to $15.00 per unit, but fixed expenses would increase to $100,000
per month.
(1.) Calculate operating income at a volume of 12,000 units per month with the new cost
structure.
(2.) Calculate the break-even point in units with the new cost structure.
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