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Q. Crazy Crafters is a manufacturer of furniture items. The company is considering the possibility of offering a new coffee table that would sell for $415 each. Cost to manufacture these coffee tables comprises $135 in materials and $80 in direct labour for each coffee table. Variable marketing and selling costs would be $25 each. In order to manufacture these coffee tables, the company would need to incur $525,000 in fixed costs for new equipment.
a. Calculate the break-even point of the coffee tables in units sold.
b. Illustrate what would be the total revenue at the break-even point?
c. Explain how many units would Crazy Crafters need to sell to earn a profit of $157,500?
d. If fixed costs in fact are $595,000 rather than $525,000, explain how many units would need to be sold in order to earn $157,500?
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