a) Calculate Mollycaits' operating breakeven point.

Selling price 7.69

Variable cost 5.87
Contribution margin 1.82

Breakeven point
Fixed cost 4500
Contribution margin 1.82
= 2,473 figurines

b) Calculate Mollycaits' EBIT on the department store order.

Sales 9500
Less:
Variablec cost (5.87*1480) -8687.6
Fixed cost -4500
EBIT -3687.6

c) If Molly renegotiates the contract at a price of $9.51 per figurine, what will the EBIT be?

Sales ( 9.51*1480) 14074.8

Less:
Variablec cost (5.87*1480) -8687.6
Fixed cost -4500
EBIT 887.2

d) If the store refuses to pay more than $7.69 per unit but is willing to negotiate quantity, what quantity of figurines will resu

Fixed cost+ desired profit 8200 ( 4500+3700)

Contribution margin 1.82
= 4,505 figurines

e) At this time, Mollycaits come in 15 different varieties. Whereas the average variable cost per unit is $5.87, the actual co
What recommendation would you have for Molly and Caitlin with regard to pricing and/or the numbers and types of units th

Price the units differently by basing it on the variable cost of the unit cost of production will be
priced highly compared to those thagt are less costly to produce.
Should same price for all units then they have to decrease the 15 currently available types to include those with an average co

The problem relates to CVP analysis particularly determining the brek even points.
 antity of figurines will result in an EBIT of $3,700?

nit is $5.87, the actual cost varies from unit to unit.

mbers and types of units that they offer for sale?

e those with an average cost below 4.65 ( 7.69-(4500/1480)