2. On the basis of French’s revised information, what does next year look like? a. What is the break-even point?
The break even unit for the aggregate production is 1,035,686 units. Calculation of the break even points using the new estimates: Breakeven points have been calculated using the formula:
Breakeven number of units = Fixed costs / Contribution margin per unit, where Contribution margin per unit = Selling price – Variable cost per unit
b. What level of operations must be achieved to pay the extra dividend, ignoring union demands? To pay the extra dividend of 50% and to retain the profit of 150,000 we need to have the profit after taxes as 600,000. As half of the revenues go to the government as taxes therefore the total revenues before tax deduction should be equal to 1,200,000.
c. What level of operations must be achieved to meet union demands, ignoring bonus dividends?
d. What level of operations must be achieved to meet both union demands & bonus dividends?
3. Can the break-even analysis help the company decide whether to alter the existing product emphasis?...