Break-even Analysis- Single Product Whirlpool is considering selling delux refrigerators for residential use. Projected financial information related to this project follows (this is the base case or budget): Selling price $3,000 per unit Variable Cost $600 per unit Fixed costs $6,000,000 for the period Projected Sales4,500units (BUDGETED UNITS) Using this information, answer the following questions: What is the break-even point in sales dollars and units?
Calculate operating profit using information from base case.
How many refrigerators must be sold to earn a profit of $4,800,000?
What is the projected margin of safety in dollars and units?
Go back to the base case and calculate the operating profit if the selling price per unit increases by 15%.
Go back to the bas case. Recent change in strategy, paying commissions (increase variable cost) at $500 per unit increases the volume by 10% and decreases fixed cost by $1,000,000. Show the contribution margin and operating profit at these new cost / volume levels.