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(Break-even point and operating leverage) Rockstar, Inc. manufactures a complete line of men's and women's casual...
(Break-even point and operating leverage) Rockstar, Inc. manufactures a complete line of men's and women's casual shoes for independent merchants. The average selling price of its finished product is $90 per pair. The variable cost for this same pair of shoes is $55. Footwear Inc. incurs fixed costs of $180 comma 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 operating profit or loss (that is, net operating income) at the following units of production sold: 5 comma 000 pairs of shoes? 10 comma 000 pairs of shoes? 17 comma 000 pairs of shoes?
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