Reference no: EM132501916

Sockerville machine shop fabricates polished steel casings. They currently sell 9,000 casings at a selling price of $80. They have the following cost structure:

Variable costs per unit               $30

Fixed costs                         $300,000

Required (each requirement is independent):

Question a. What is the breakeven point in units?

Question b. Suppose that if they decrease their price to $70, they could increase sales by 20%. What would the change in profit be if they decrease their price to $70?

Question c. What is the minimum price that Sockerville would be willing to charge in order to achieve an increase in unit sales of 20% (round to the nearest cent)?

Question d. Suppose that Sockerville can purchase a machine that would increase fixed costs to $400,000 and decrease unit variable costs to $25 per unit. At what level of production and sales would Sockerville be indifferent between the old machine and the new machine?