university of southern california Operations And Supply Chain Management Assignment Help -Breakeven point

Question - Breakeven analysis, what-if analysis The Herschel Candy Company produces a single product: a
chocolate almond bar that sells for $0.40 per bar.
The variable costs for each bar (sugar, chocolate, almonds, wrapper, and labor) total $0.25. The total
monthly fixed costs are $60,000. Last month, bar sales reached 1 million. However, the president of
Herschel Candy Company was not satisfied with its performance and is considering the following
options to increase the company’s profitability:
1. Increase advertising.
2. Increase the quality of the bar’s ingredients and simultaneously increase the selling price.
3. Increase the selling price with no change in ingredients.
Required
(a) The sales manager is confident that an i ...Read More ntensive advertising campaign will double sales volume. If
the company president’s goal is to increase this month’s profits by 50% over last month’s, what is the
maximum amount that can be spent on advertising that doubles sales volume?
(b) Assume that the company increases the quality of its ingredients, thus increasing variable costs to
$0.30 per bar. By how much must the selling price per unit be increased to maintain the same
breakeven point in units?
(c) Assume next that the company has decided to increase its selling price to $0.50 per bar with no
change in advertising or ingredients. Compute the sales volume in units that would be needed at the
new price for the company to earn the same profit as it earned last month. ...Read Less

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