43) A recently retired professor, Melinda Marketing, plans to establish the Hot-Air Fan Company and manufacture circulating fans. She estimates the fixed cost of operations to be $357,500 annually. The variable cost of producing the fans is forecasted to be $85 per unit. a. How many fans must be sold to break even if the fans are priced at $150? b. If Hot-Air sells 6,000 fans, what will be the EBIT? c. If Hot-Air sells 6,000 fans and has interest expense of $8,125, what is Hot-Air’s times-interest-earned? Hot-Air does not have any nonoperating expenses. d. If the fans are priced at $150, what is Hot-Air’s breakeven sales?
43) A recently retired professor, Melinda Marketing, plans to establish the Hot-Air Fan Company and manufacture circulating fans. She estimates the fixed cost of operations to be $357,500 annually. The variable cost of producing the fans is
a. How many fans must be sold to break even if the fans are priced at $150?
b. If Hot-Air sells 6,000 fans, what will be the EBIT?
c. If Hot-Air sells 6,000 fans and has interest expense of $8,125, what is Hot-Air’s times-interest-earned? Hot-Air does not have any nonoperating expenses.
d. If the fans are priced at $150, what is Hot-Air’s breakeven sales?
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Breakeven point is a situation where total cost is equal to sales of the firm or it’s a level of no profit or no loss.
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