The Unique Toys Company manufactures and sells toys. Currently, 300,000 units are sold per year at $12.50 per unit. Fixed costs are $880,000 per year. Variable costs are $7.00 per unit. Consider each case separately:   Required:   a. What is the current annual operating income? What is the present breakeven point in revenues? Compute the new operating income for each of the following changes:   A 10% increase in variable costs A $250,000 increase in fixed costs and a 2% increase in units sold A 10% decrease in fixed costs, a 10% decrease in selling price, a 10% increase in variable cost per unit, and a 25% increase in units sold Compute the new breakeven point in units for each of the following changes:   A 20% increase in fixed costs A 12% increase in selling price and a $30,000 increase in fixed costs

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
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The Unique Toys Company manufactures and sells toys. Currently, 300,000 units are sold per year at $12.50 per unit. Fixed costs are $880,000 per year. Variable costs are $7.00 per unit. Consider each case separately:

 

Required:

 

a. What is the current annual operating income?

What is the present breakeven point in revenues?

Compute the new operating income for each of the following changes:

 

A 10% increase in variable costs

A $250,000 increase in fixed costs and a 2% increase in units sold

A 10% decrease in fixed costs, a 10% decrease in selling price, a 10% increase in variable cost per unit, and a 25% increase in units sold

Compute the new breakeven point in units for each of the following changes:

 

A 20% increase in fixed costs

A 12% increase in selling price and a $30,000 increase in fixed costs

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