Question: Fast Buck Inc. sells a product at a unit price of $5.50, with a variable cost of $3.25 per unit. Total fixed costs are $360,000.
1) Calculate the breakeven point.
2) Calculate a 20% increase in volume above breakeven and determine its precise dollar impact on profits.
3) Calculate the effect of a $.50 drop in price and a $.25 rise in variable costs on the breakeven quantity with no change in fixed costs.