12.1 Retro Inc. sells vintage football jerseys for $72 each. Variable cost are $

Question

12.1 Retro Inc. sells vintage football jerseys for $72 each. Variable cost are $58 per unit and total fixed cost (including depreciation and amortization expense) are $84,000 per year. If sales for next are expected to equal 8,000 jerseys, how much can variable cost per unit increase without EBIT becoming negative?

12.2. how would a capital-intensive company fare during good and poor economic times as compared with less capital-intensive companies? explain.

12.3 The manager of Roy’s Restaurant has determined that if revenues were to increase by 20 percent, then EBIT would increase by 45 percent to $87,000. What would be the corresponding change in EBITDA IF REVENUES INCREASED by percent and cash fixed cost are $35,000?

Explanation / Answer

As per Chegg guidelines we answer one question per post so I have answered 1 question Statement showing computations Particulars Amount Sales Revenue = 8000*72       576,000.00 Total fixed cost (including depreciation and amortization expense)       (84,000.00) Maximum Variable Cost       492,000.00 Maximum Variable Cost per unit = 492,000/8,000                  61.50 Maximum increase in VC = 61.50 - 58                    3.50

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