A subsidiary of a major furniture company manufactures wooden pallets. The plant has the capacity to produce 300,000 pallet/yr. Presently the plant is operating at 70% capacty. The pallets selling price is $18.25/pallet. The variable cost is $15.75/pallet. At zero ouput the plant's annual fixed costs are $550,000 This ammoun remains constant for any production between zero and plant capacity.
A. With the present 70% capaciy production, what is the expected annual profit or loss for the susidiary plant?
B. What annual volume of sales (units) is required in order for the plant to break even?
C. What would the annual profit/loss if the plant is opperating at 90% capacity?
D. If fixed costs could be reduced by 40% what would e the new break even sales volume?