The Weaver Watch Company sells watches for $25, the fixed costs are $140,000 and variable costs are $15 per watch.
A. What is the firm's gain or loss at sales of 8,000 watches? at 18,000 watches.
B. What is the breakeven point? Illustrate by means of a chart.
C. What would happen to the breakeven point if the selling price was raised to $31? What is the significance of this analysis?
D. What would happen to the breakeven point if the selling price was raised to $31 but the variable costs rose to $23 a unit?