Question:
BREAK-EVEN IN UNITS
Olmos Company manufactures room-sized air purifiers. Fixed costs amount to $1,386,000 per year. Variable costs per air purifier are $98, and the average price per air purifier is $120.
Required:
1. How many air purifiers must Olmos Company sell to break even?
2. If Olmos Company sells 85,000 air purifiers in a year, what is the operating income?
3. If Olmos Company's variable costs decrease to $70 per air purifier while the price and fixed costs remain unchanged, what is the new break-even point?