Philip Nellson owns a fireworks store. Philip's fixed costs are $10,000 a month, and each fireworks assortment he sells costs, on average, $7. The average selling price for anassortment is $21.a. The break-even point for Philip's fireworks store is units (Enter your response rounded up to the next whole number)b. Suppose Philip decides to expand his business. His new fixed expenses will be $15,500, but the average cost for a fireworks assortment will fall to just $3 due to Philip'shigher purchase volumesThe new break-even point isunits. (Enter your response rounded up to the next whole number)c. At what volume level is Philip indifferent to the two capacity alternatives outlined above?Philip's indifference point is units. (Enter your response rounded to the nearest whole number)

To find: (a) The break even point. (b) The new break even point. (c) The indifference points.…

Answered: Philip Nelson owns a fireworks store.…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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Philip Neilson owns a fireworks store. Philip's fixed costs are $17,000 a month, and each fireworks assortment he sells costs, on average, $14. The average selling price for an assortment is $39. Suppose Philip decides to expand his business. His new fixed expenses will be $27,500, but the average cost for a fireworks assortment will fall to just $6 due to Philip's higher purchase volumes. What is the new break-even point?
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