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Question

Chevy's Manufacturing has fixed costs (e.g. depreciation) of $40,000 which can be directly attributable to producing a particular product. the product sells for $2 a unit and variable costs are $1.20. What is the break-even point in units? Suppose the firm sold 100,000 units last year and expects volume to increase by 10 percent. What percentage increase in profits would Chevy's see with this increase in volume?

Ok, price less variable costs is 80 cents per unit. How many units are needed to cover the $40,000?

b) calculate the net profit at 100,000 and 110,000.