Fundamentals of Financial Management
Fundamentals of Financial Management
15th Edition
ISBN: 9780357307724
Author: Brigham
Publisher: CENGAGE L
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Chapter 14, Problem 6P

a.

Summary Introduction

To determine: The firm’s gain or loss at sales of 9,000 watches and at sales of 15,000 watches.

Introduction:

Break-even Analysis:

Break-even analysis is a type of tool used by the cost accountant professionals to find out the number of unit produced when the total cost is equal to the company revenue.

b.

Summary Introduction

To determine: The break-even point by means of chart.

c.

Summary Introduction

To determine: The break-even point when selling price is $33.

d.

Summary Introduction

To determine: The break-even point when selling price is $33 and variable cost is $ 24 per unit.

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The Weaver Watch Company sells watches for $25, the fixed costs are $140,000, and variable costs are $15 per watch.a. What is the firm’s gain or loss at sales of 8,000 watches? at 18,000 watches? b. What is the breakeven point? Illustrate by means of a chart.c. What would happen to the breakeven point if the selling price was raised to $31? What is the significance of this analysis?
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