JWG Company publishes Creative Crosswords. Last year, the book of puzzles sold f
ID: 2384153 • Letter: J
Question
JWG Company publishes Creative Crosswords. Last year, the book of puzzles sold for $10, with a variable operating cost of $8 per book and a fixed operating cost of $40,000.
A. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if all figures remain the same as for last year?
B. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if fixed operating costs increase to $44,000 and all other figures remain the same?
C. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if the selling price increases to $10.50 and all costs remain the same as for last year?
D. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if the variable operating cost per book increases to $8.50 and all other figures remain the same?
E. What conclusions about the operating breakeven point can be drawn from your answers?
Explanation / Answer
JWG Company publishes Creative Crosswords. Last year, the book of puzzles sold for $10, with a variable operating cost of $8 per book and a fixed operating cost of $40,000.
A. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if all figures remain the same as for last year?
Breakeven point = Fixed Cost/(Sale Price- Variable cost per book)
Breakeven point = 40000/(10-8)
Breakeven point = 20000
B. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if fixed operating costs increase to $44,000 and all other figures remain the same?
Breakeven point = Fixed Cost/(Sale Price- Variable cost per book)
Breakeven point = 44000/(10-8)
Breakeven point = 22000
C. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if the selling price increases to $10.50 and all costs remain the same as for last year?
Breakeven point = Fixed Cost/(Sale Price- Variable cost per book)
Breakeven point = 40000/(10.5-8)
Breakeven point = 16000
D. How many books must JWG sell this year to achieve the breakeven point for the stated operating costs if the variable operating cost per book increases to $8.50 and all other figures remain the same?
Breakeven point = Fixed Cost/(Sale Price- Variable cost per book)
Breakeven point = 40000/(10-8.5)
Breakeven point = 26,667
E. What conclusions about the operating breakeven point can be drawn from your answers?
operating breakeven point changes if there is any change in Fixed Cost , Sale Price or Variable cost , as these are the input data, All the three are having their importance as one of them get changed the breakeven point is also being changed accordingly.
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