Question

Evan Surfing is considering expanding its facility to manufacture additional surfing equipment. The firm knows it costs $100,000 to setup a production run for surfboards. This cost doesn't change as the number of surfboards goes up or down. It is considered fixed even if no surfboards are made. The firm also knows that it takes $100 in labor and materials to produce a surfboard. Surfboards are sold for $300 each. Let x be the number of surfboards to be manufactured. (This is all the material you are given)* C(x)=*p(x)=* What is the break even volume? Use (2) to find the break-even point or use the formula* What price does Evan need to charge for each surfboard in order to maintain the original break-even point. Assume costs are still 20% more.

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Evan Surfing is considering expanding its facility to manufacture additional surfing equipment.

Fixed cost= $100000

Direct and labor= $100

Price= $300

Break-even point in units= fixed points/marginal contribution

Break-even point=100000/(300-100)

Break-even point= 100000/200= 500 units

If costs increase by 20%:

Price=?

500units=100000/(P-120)

500*(P-120)=100000

P-120= 100000/500

P=200+120

P=320