Paranormal Company is considering the development of two products: no. 65 or no. 66. Manufacturing cost information follows.

Regardless of which product is introduced, the anticipated selling price will be $50 and the company will pay a 10% sales commission on gross dollar sales. Paranormal will not carry an inventory of these items.
Required:
A. What is the break-even sales volume (in dollars) on product no. 66?
B. Which of the two products will be more profitable at a sales level of 25,000 units?
C. At what unit-volume level will the profit/loss on product no. 65 equal the profit/loss on product no. 66?

Question

Paranormal Company is considering the development of two products: no. 65 or no. 66. Manufacturing cost information follows.
  
Regardless of which product is introduced, the anticipated selling price will be $50 and the company will pay a 10% sales commission on gross dollar sales. Paranormal will not carry an inventory of these items. 
Required: 
A. What is the break-even sales volume (in dollars) on product no. 66?
B. Which of the two products will be more profitable at a sales level of 25,000 units?
C. At what unit-volume level will the profit/loss on product no. 65 equal the profit/loss on product no. 66?

Quizplus · Accepted Answer

The Answer of Paranormal Company is considering the development of two products: no. 65 or no. 66. Manufacturing cost information follows.
  
Regardless of which product is introduced, the anticipated selling price will be $50 and the company will pay a 10% sales commission on gross dollar sales. Paranormal will not carry an inventory of these items. 
Required: 
A. What is the break-even sales volume (in dollars) on product no. 66?
B. Which of the two products will be more profitable at a sales level of 25,000 units?
C. At what unit-volume level will the profit/loss on product no. 65 equal the profit/loss on product no. 66?

Paranormal Company Is Considering the Development of Two Products: No