Axle and Wheel Manufacturing currently produces and sells 1000 axles per month. Its revenue is $125,000 per month. The following per unit data apply for sales to regular customers.
- Direct materials $30
- Direct manufacturing labor $5
- Variable manufacturing overhead $10
- Fixed manufacturing overhead $40
- Total manufacturing costs $85
1. What is the breakeven level in units and in dollars for Axle and Wheel?
2. The plant has capacity for 2,000 axles and is considering expanding production to 1,500 axles. What is the total monthly cost and operating income of producing 1500 axles?
3. What is the per-unit cost when producing 1500 axles?
4. If Axle and Wheel wants an operating profit of approximately $104,000, how many axles would it have to manufacture and sell?