A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of .70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.
a. What is the monthly breakeven in units if the price is $.90 each? In revenue?
b. What price must be charged to earn a monthly profit of $5,000 if the forecast is for 100,000 units per month?
c. What volume is needed at a price of $.90 to earn a monthly profit of $5,000?
d. What volume is needed at a price of $.90 to obtain a monthly profit of $.10 per unit?
e. What volume is needed at a price of $.90 to obtain a monthly revenue of $20,000?