A small but growing manufacturer of business class networkrouters. They produce two main types of routers, Model A and themore expensive variant, Model B. The company has a capacity ofproducing 500 Model A routers per month and currently produces 300routers of that type every month. The routers are sold to smallcomputer stores. The company’s expenses are $30,000.

What are the contribution margin and the contribution rate[round to a full number]?

What is the break-even point in units? At their current level ofproduction, how many units above or below the break-even point iscompany working at?

How much profit per month would be earned at the current levelof production?

At the current level of production what percent of capacity isutilized?

What is the BE volume as a percent of current production [usethe rounded number of BE units]?

What is the BE volume as a percent of capacity [use the roundednumber of BE units]?

Company has decided to increase its production from the current300 routers per month to 425 routers per month, while at the sametime lowering its selling price to $85. How would this change thecompany’s profit?

A chain store wants to purchase additional routers from companyon a regular basis. To meet the new demand, company expanded theirfacility by renting additional space. This increased their totalfixed cost by 30% and doubled their capacity to 1200 units. companywants to break-even at 25% of this new capacity. What is the lowestprice they can charge per router and still break-even?

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