A firm has the capacity to produce 550,000 units of product per year. At present, it is operating at 68% of capacity. The firm’s income per unit is $1, annual fixed costs are $188,000, and variable costs are $0.3860 per unit of product.
What is the firm’s current annual profit or loss?
At what volume of sales does the firm break even?
What will be the profit or loss if the plant runs at 90 percent of capacity assuming a constant income per unit and constant variable cost per unit?