The Bozo Company has decided to do a breakeven analysis on their production process to determine if they could reduce their breakeven point. The following criteria apply:
Sales price of units $75
Variable cost per unit 25
Total Fixed costs $400,000
a. What is the current breakeven cost?
b. What would happen to the breakeven point if we lower our fixed costs by $100,000 but increased our variable cost by $5 per unit?
c. What would happen to the breakeven point if we increased our fixed cost by $200,000 and decreased our variable cost by $11 per unit?
d. Which of the above cost structures would you use if you were certain to have 40,000 units sold?