2-41 (Multiple Breakeven Points) In September 2006, Capetini Capacitor
Company sold capacitors to its distributors for 250.00 per capacitor.
The sales level of 3,000 capacitors a month was less than the
single-shift capacity of 4,400 capacitors at its plant located in San
Diego. Variable production costs were $100.00mper capacitor, and fixed
production costs were 200,000 per month. In addition, variable selling
and distribution support costs are $20.00 per capacitor, and fixed
selling and distribution support costs are $62500.00 per month. At the
suggestion of the marketing department, In October 2006 Capetini reduced
the sales price to $200.00and increased the monthly advertising budget
by $17,500. Sales are expected to increase to 6,800 capacitors per
month. If the demand exceeds the single-shift capacity of 4,400
capacitors, the plant needs to be operated in two shifts. Two shift
operation will increase monthly fixed production costs to 310,000.
a) Determine the contribution margin per capital in September 2006
b) Determine the sales level in number of capacitors at which the profit-to-share ratio would be 10% in September 2006.
c) Determine the two breakeven points for October 2006
d) Determine the sales level in number of capacitors at which the
profit-to-sales ratio in October is the same as the actual
profit-to-share ratio in September. Is there more than one possible
sales level at which the equality would occur?
Click here for the solution: 2-41 (Multiple Breakeven Points) In September 2006, Capetini Capacitor Company sold capacitors to its distributors for 250.00 per capacitor
