Question: (3 Points) White Products has fixed operating costs of $250,000, variable operating costs of $25 per unit, and a selling price of $45 per unit?

1. Calculate the operating breakeven point in units.
2. Calculate the firm’s EBIT at 14,000, 15,000, and 16,000 units respectively.
3. With 15,000 units as the base case, what are the percentage changes in Q and EBIT as the number of units sold increases or decreases by 1,000 (to 16,000 or 14,000 units), as in part b?
4. Now, assume that the company decides to further automate its production processes, replacing workers (variable costs) with machines (fixed costs). After making this change, will the company’s profitability be more or less sensitive to changes in Q (relative to Parts a. to c.)? You do NOT have to do any calculations in this part.

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document