BREAK EVEN 893

1. Chambers Company has just gathered estimates to conduct a break even analysis on a new product. Variable costs are $7.00/unit. The additional plant costs will be $48,000. General overhead costs allocated to the new product will be $18,000. Advertising expenditures will be $80,000 and $55,000 will be spent on distribution. If the product sells for $12, what will be the break even point in units? In dollars?


2. TD Toiletries has developed an addition to its Lizardman Cologne line, tentatively named Eau de Toad Cologne. Unit variable costs are $3.25 for a 3 ounce bottle. Heavy advertising costs in the first year would contribute to an overall fixed cost figure of $900,000. If the cologne is priced $18.50 per bottle, how many bottles of Eau de Toad must be sold to break even? What is the dollar sales figure for break even?