Question

The Hartnett Corporation manufactures baseball bats with Pudge Rodriguez's autograph stamped on them. Each bat sells for $35 and has a variable cost of $22. There are $97,500 in fixed costs involved in the production process. Compute the break-even point in units. Find the sales (in units) needed to earn a profit of $262,500.

Answer 1

The break-even point for the Hartnett Corporation is 7,500 units, and to earn a profit of $262,500, they need to sell approximately 27,692 units.

Step-by-step explanation:

The Hartnett Corporation manufactures baseball bats and sells each bat for $35 with a variable cost of $22. Given fixed costs on $97,500, to calculate the break-even point in units, we use the formula: Break-even point (in units) = Fixed Costs / (Selling Price per unit - Variable Cost per unit), which results in $97,500 / ($35 - $22) = $97,500 / $13 = 7,500 units. To find the sales needed to earn a profit of $262,500, we use the target profit formula: Sales in units to earn target profit = (Fixed Costs + Target Profit) / (Selling Price per unit - Variable Cost per unit). Substituting the given numbers: (97,500 + 262,500) / 13 = 360,000 / 13 = 27,692 units approximately.