The Quiet Blow Company has a small plant that manufactures noise suppressors for leaf blowers. Its annual fixed costs are $30,000, and its variable costs are $10 per unit. It can sell a suppressor for $25.
a. How many suppressors must the company sell to break even?
b. What is the break-even revenue?
c. The company sold 3,000 units last year. What was its profit?
d. Due to a new lump-sum tax, next year's fixed costs are expected to rise to $37,500. What will be the break-even quantity?
e. If the company will sell the number of units obtained in part (d) and wants to maintain the same profit as last year, what will its new price have to be?