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BREAK EVEN ANALYSIS The Warren Watch Company sells watches for $26, fixed cost are $155,000, and variable costs are $13 per Watch. a. What is the firm's gain or loss at sales of 9,000 watches? At 15,000 watches? b. What is the breaks-even point? Illustrate by means of a chart. c. What would happen to the breaks-even point if the selling price was raised to $33? What is the significance of this analysis? d. What would happen to the break-even point if the selling price was raised to $33 but variable costs rose to 24 a unit?

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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250
BuyFind

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250

Solutions

Chapter
Section
Chapter 14, Problem 6P
Textbook Problem

BREAK EVEN ANALYSIS The Warren Watch Company sells watches for $26, fixed cost are $155,000, and variable costs are $13 per Watch.

  1. a. What is the firm's gain or loss at sales of 9,000 watches? At 15,000 watches?
  2. b. What is the breaks-even point? Illustrate by means of a chart.
  3. c. What would happen to the breaks-even point if the selling price was raised to $33? What is the significance of this analysis?
  4. d. What would happen to the break-even point if the selling price was raised to $33 but variable costs rose to 24 a unit?

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Chapter 14 Solutions

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