Question
In: Finance
The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez’s autograph stamped on them. Each bat sells...
The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez’s autograph stamped on them. Each bat sells for $23 and has a variable cost of $13. There are $25,000 in fixed costs involved in the production process.
a. Compute the break-even point in units.
b. Find the sales (in units) needed to earn a profit of $20,200.
Solutions
Expert Solution
a. Break-even point in units = Fixed costs / (Selling price - Variable cost)
Break-even point in units = $25,000 / ($23 - $13)
Break-even point in units = 2,500 units
b. Sales (in units) needed to earn a profit = (Fixed costs + Desired profit) / (Selling price - Variable cost)
Sales (in units) needed to earn a profit = ($25,000 + $20,200) / ($23 - $13)
Sales (in units) needed to earn a profit = 4,520 units
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