Solved! Get answer or ask a different Question 3820

Market conditions will require the selling price of the product to be $3.45 per unit. The details for each alternative are given in the table.

 Alternative 1

 Variable costs

   $2.20

Fixed costs

   $80,000

 Total assets

   $350,000

   Alternative 2

   Variable costs

    $2.70

   Fixed costs

   $30,000

   Total assets

   $350,000

   Analyze how the CVP analysis helps management in the planning stage of a new business.

What is the break-even quantity for each of the investment alternatives?

Analyze the breakeven differences between the two alternatives. What does the breakeven quantity tell you?

Which alternative would you recommend to the company? Explain the pros and cons of each alternative and the reasons for your selection.