Question
In: Operations Management
A manufacturer produces three types of humidifiers. The retail price of Humidifier Regular (HR) is $60...
A manufacturer produces three types of humidifiers. The retail price of Humidifier Regular (HR) is $60 with variable costs of $20. Humidifier Advanced (HA) sells for $200 for its advanced features. This model’s variable costs are $80. Humidifier Simple (HS) is a simplified version and only sells for $25 with variable costs of $15. The manufacturer has machines and facilities worth $320,000 annually. The sales data show that 1000 units of HR, 2000 units of HA, and 10,000 units of HS was sold last year. Calculate the break-even point of the firm. The firm has some idle capacity at these volumes, and chooses to cut the selling price of HR from $60 to $45, believing that its sales volume will rise from 1000 units to 2500 units. What is the revised break-even point?
Solutions
Expert Solution
First option :
Working:
Option 2:Cutting the selling price of HR from $60 to $45, believing that its sales volume will rise from 1000 units to 2500 units
Working:
Formulas: Pls feed in data and formulas as follows:
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