A soft drink manufacturer opened a new manufacturing plant in the Midwest. The total fixed costs are $70 million. It plans to sell soft drinks for $6.00 for a package of 10 12- ounce cans to retailers. Its variable costs for the ingredients are $3.00 per package.
a. Calculate the break-even volume.
b. What would the break-even be if the firm wanted to make $22 million in profit?
c. What would happen to the breakeven point if the fixed costs decreased to $61 million?
d. What would happen to the breakeven point if the variable costs increased to $3.50 due to increases in commodity costs (with fixed costs of $61 million)?