Go to the Textbook's OLC (Www

Short Answer

Go to the textbook's OLC (www.mcgrawhill.ca/olc/jerome/) and work your way to the Student Edition. In the navigation bar, select "Chapter 5" in the dropdown box. In the list of resources for Chapter 5, select "Links in Textbook" and then click on the link named "Contribution Margin Chart". Use the chart to solve the following problem:
Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3200 composters per month. Annual fixed costs total $648,000.
a) What is the break-even volume per month?
b) What is the monthly net income at a volume of 2500 composters per month?
c) What is the monthly net income if Reflex operates at 50% of capacity during a recession?
d) At what percent utilization would the annual net income be $226,800?
e) If fixed and variable costs remain the same, how much do the monthly break-even unit sales change for a $1 increase in the selling price?