Enrique is studying the feasibility of producing a new product. His existing facilities could be expanded to manufacture 2,000 new units per month. The unit cost is $75. Estimated fixed costs are $3.36 mil per year and variable costs are $25 per unit. Competitors sell a similar product for $350 each. Use the graphical approach to CVP analysis to solve the following:
a) What would the net income be at 80% capacity?
b) What would unit sales have to be to attain a net income of $100,000?
c) If sales dropped to 60% of capacity, what would the resulting net income be?

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Briana Hawley · Accepted Answer

Final Answer : $120,000; approx.1520; $20,000

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