Question

The Harmon Corporation manufactures bats with Larry Walker's autograph stamped on them. Each bat sells for $15 and has a variable cost of $9. There is $21,000 in fixed costs involved in the production process.

a. Compute the break-even point in units. (Round the final answer to the nearest whole number.) Break-even point bats
b. Find the sales (in units) needed to earn o profit of $16,200. (Round the final answer to the nearest whole number.) Sales bats

Answer 1

To break even, the Harmon Corporation needs to sell 3,500 bats. To make a profit of $16,200, they need to sell 6,200 bats. These figures are calculated by dividing the sum of fixed costs and desired profit by the contribution margin per unit.

Step-by-step explanation:

Break-even Point and Profit Analysis

The question relates to how to compute the break-even point and determine sales needed to achieve a certain profit level within a business setting. Using the given cost and sales price data, we will calculate both of these figures.

To find the break-even point in units for the Harmon Corporation, we use the formula: Break-even point in units = Fixed Costs / (Sales price per unit - Variable cost per unit). Plugging in the values: Break-even point in units = $21,000 / ($15 - $9), we find that the company must sell 3,500 bats to break even, after rounding to the nearest whole number.

To calculate the number of sales needed to earn a profit of $16,200, the equation to be used is: Sales units for desired profit = (Fixed Costs + Desired Profit) / (Sales price per unit - Variable cost per unit). Hence, the calculation will be: Sales units for desired profit = ($21,000 + $16,200) / ($15 - $9), which results in selling a total of 6,200 bats, once again rounded to the nearest whole number.