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Question - Crazy Crafters is a manufacturer of furniture items. The company is considering the possibility of offering a new coffee table that would sell for $415 each. Cost to manufacture these coffee tables includes $135 in materials and $80 in direct labor for each coffee table. Variable marketing and selling costs would be $25 each. In order to manufacture these coffee tables, the company would need to incur $525,000 in fixed costs for new equipment.

a. Compute the break-even point of the coffee tables in units sold.

b. What would be the total revenue at the break-even point?

c. How many units would Crazy Crafters need to sell to earn a profit of $157,500?

d. If fixed costs in fact are $595,000 rather than $525,000, how many units would need to be sold in order to earn $157,500?

Accounting Basics, Accounting

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