Question: Break-Even/Profit Analysis This problem lets you see the dynamics of break-even analysis. The starring values (costs, revenues, etc.) for this problem arc from the break-even analysis example in Setting in the Business World." of the 11th edition of Basic Marketing The first column computes a break-even point. You can change ants and prices to figure new break-even points (in units and dollars). The second column goes further. There you can specify target profit level, and the unit and dollar sales needed to achieve your target profit level will be computed. You can also estimate possible sales quantities and the program will compute costs, tales, and profits. Use this spreadsheet to answer the following questions.
a. Vary the selling price between $1.00 and $1.40. Prepare a table showing how the break-even point (in units and dollats) changes at the different price levels
b. If you hope to earn a target profit of $25,000, how many units would you have to sell? What would total cost be? Total sales dollars! (Note: Use the right-hand ("profit analysis") column in the spreadsheet.)
c. Using the "profit analysis" column (column 2), allow your estimate of the sales quantity to vary between 70,000 and 90,000. Prepare a table that shows, for each quantity level, what happens to total cost, average cost per unit, and profit. Explain why average cost changes as it does over the different quantity values.