Problem:
The Weaver Watch Company sells watches for $25, the fixed costs are $140,000, and variable costs are $15 per watch.
Required:
Question 1: What is the firm's gain or loss at sales of 8,000 watches? At 18,000 watches?
Question 2: What is the break-even point? Illustrate by means of a chart.
Question 3: What would happen to the break-even point if the selling price was raised to $31? Whatis the significance of this analysis?
Question 4: What would happen to the break-even point if the selling price was raised to $31 butvariable costs rose to $23 a unit?
Note: Explain all calculation and formulas.