Air Production Company produces pneumatic lifts used to assist emergency

Feb 3rd, 2012
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rescue teams used to assist victims of auto and other accidents. The costs of manufacturing and marketing the pneumatic lifts at the companyÂ’s normal volume of 3000 per month are shown in Exhibit 1. Exhibit 1 Unit manufacturing costs: Variable materials $495 Variable labor $795 Variable Overhead $475 Fixed Overhead $640 Total unit manufacturing costs $2,405 Unit marketing costs: Variable $235 Fixed $745 Total unit marketing costs $980 Total unit costs $3,385 Questions: The following refers to the data given in exhibit 1. Treat each problem separately. Unless otherwise stated, assume a selling price of $4250 per lift. Ignore income taxes. Assume no beginning or ending inventories. 1. What is the break even volume: a. In units? b. In sales dollars? 2. Company research indicates that monthly sales have a potential of 3700 units, within manufacturing capacity limit of 4200, if the price were decreased from $4250 to $37

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