Question: Associated Containers Company is planning to manufacture and sell plastic pencil holders. Direct labor and raw materials will be $2.28 per unit. Fixed costs are $15,300 and the expected selling price is $3.49 per unit.
1) Determine the break-even point (where operating profit is zero) in units and dollars.
2) How much profit or loss before interest and taxes will there be if 10,825 units are sold?
3) What will the selling price per unit have to be if 13,650 units are sold in order to break even?
4) How much will variable costs per unit have to be in order to break even if only 9,500 units are expected to be sold and the selling price is $3.49?