The Fancy Shoe company sells shoes for $125 each. Manufacturing cost is $53.40 per shoe; marketing costs are $21.35 per shoe; and royalty payments are 15% of the selling price. The fixed cost of preparing the shoes is $398,000. Capacity is 30,000 shoes.    (A) Compute the break-even point   (i) in units;   (ii) in dollars;    (B) Determine the break-even point in units if fixed costs are increased by $5,300 while manufacturing cost is reduced by $4.80 per shoe.   (C) In a new situation (ignore question 1(b)), determine the break-even point in units if the selling price is increased by 12% while fixed costs are decreased by $3,900.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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1. The Fancy Shoe company sells shoes for $125 each. Manufacturing cost is $53.40 per shoe; marketing costs are $21.35 per shoe; and royalty payments are 15% of the selling price. The fixed cost of preparing the shoes is $398,000. Capacity is 30,000 shoes. 
 

(A) Compute the break-even point 

 (i) in units; 

 (ii) in dollars; 

 

(B) Determine the break-even point in units if fixed costs are increased by $5,300 while manufacturing cost is reduced by $4.80 per shoe.

 

(C) In a new situation (ignore question 1(b)), determine the break-even point in units if the selling price is increased by 12% while fixed costs are decreased by $3,900.

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