The Raquet Business Is Considering the Manufacture of a New

question 92

Essay

The Raquet Business is considering the manufacture of a new type of tennis ball. Each tennis ball would sell for $3.75 and would require $1.75 in variable costs. In addition, annual fixed costs associated with the project would total $64,000.
a. Use the contribution margin approach to calculate:
(1) the breakeven point in units
(2) the breakeven point in dollars
b. Determine the operating income or loss at a sales volume of 30,000 tennis balls.
c. Determine the number of tennis balls that must be sold to earn a profit of $80,000.

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Definitions:

Soleus Muscles

A powerful muscle in the back part of the lower leg (calf) that is involved in standing and walking.

Plantar Flexion

The movement that decreases the angle between the sole of the foot and the back of the leg, as seen when pointing the toes.

Aerobic Respiration

A metabolic process in cells that uses oxygen to convert glucose or other nutrients into energy (ATP), producing carbon dioxide and water as waste products.

Calcium Channel Blockers

A class of medications that disrupt the movement of calcium through calcium channels, used to treat hypertension, angina, and certain arrhythmias by relaxing blood vessels and reducing heart workload.