J.W. Electronics sells one of its 27-inch screen TV’s for $300. The fixed cost for producing this type of TV is $125 000. The variable cost per unit is $175
a. Based on the above information, what is the break-even point in units? Show your calculations
b. The competition has reduced its price on a similar TV to $275. J.W. Electronics is considering reducing its selling price to $275 to compete. Find the new break-even point if the sales price is reduced to $275. Show your calculations
c. Calculate the profit realized by J.W. Electronics on the sale of 1,500 TVs if it keeps its selling price at $300. Show your calculation
d. How many TVs must J.W. Electronics sell to make a profit of $62,500 if it decides to reduce its sales price to $275? In percentage terms, how many additional or fewer TVs must be sold, as compared to the amount sold in part c)? Show your calculations.
e. Assume that J.W. Electronics decides to reduce its selling price to $275, but that one of its suppliers then increases the cost of the glass to make TV screens by $10 per TV. More bad news: the landlord increases the rent for J.W.’s office space by $5,000. Based on these two developments, what is the company’s new break-even point in units? Show your calculations.