The Weaver Watch Company sells watches for $29, the fixed costs are $145,000, an

Question

The Weaver Watch Company sells watches for $29, the fixed costs are $145,000, and variable costs are $12 per watch.

What is the firm's gain or loss at sales of 10,000 watches? Enter loss (if any) as negative value. Round your answer to the nearest cent.
$ ________

What is the firm's gain or loss at sales of 18,000 watches? Enter loss (if any) as negative value. Round your answer to the nearest cent.
$ ________

What is the break-even point? Round your answer to the nearest whole.
________ units

What would happen to the break-even point if the selling price was raised to $31?
_________________

What would happen to the break-even point if the selling price was raised to $31 but variable costs rose to $26 a unit? Round your answer to the nearest whole.
________ units

Explanation / Answer

a. Contribution per watch = selling price /watch - fixed costs / watch = $29 - $12 = $17 Firms Gain = $17*10000 - $145000 = $25000 (b) contribution= 18000*17=$306000 profit = 306000-145000=$161000 (c) break even point=fixed cost/contribution per unit 145000/17=8529 units (d) contribution = 31-12=$19 break even point = fixed cost/contribution per unit 145000/19=7632 units (e)contribution = 31-26=$5 per unit break even point = fixed cost/contribution per unit 145000/5 = 29000 units

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