Question
Break-even point and operating leverage) Footwear Inc. manufactures a complete line of men's and women's dress...
Break-even
point and operating
leverage)
Footwear Inc. manufactures a complete line of men's and women's dress shoes for independent merchants. The average selling price of its finished product is
$80
per pair. The variable cost for this same pair of shoes is
$50
Footwear Inc. incurs fixed costs of
$180,000
per year.
a. What is the break-even point in pairs of shoes sold for the company?
b. What is the dollar sales volume the firm must achieve to reach the break-even point?
c. What would be the firm's profit or loss at the following units of production sold:
7,000
pairs of shoes?
9,0000
pairs of shoes?
15,000
pairs of shoes?
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Answer #1
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