A Firm Has the Following Sales Data for One Month

question 19

Essay

A firm has the following sales data for one month.

a. Find the number of cases the firm must sell per month to break even.
b. The firm has an unexpected situation in which it can sell 4,000 cases of its product for the next three months 12,000 cases total) for $55 per case. The firm can only supply 7,000 cases from inventory and can only increase production to 11,000 cases total per month. There will be no variable Selling & Administrative Expenses connected with the sale. Should the firm supply the 4,000 cases per month? Why or why not?

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Definitions:

Stream of Profits

A continuous flow of earnings generated by a business or investment over a period of time.

Mining

The extraction of valuable minerals or other geological materials from the Earth.