36 auto tires inc sells tires to service stations for an average of 45 each the vari 4302579

36) Auto Tires Inc. sells tires to service stations for an average of $45 each. The variable costs of each tire are $30 and monthly fixed manufacturing costs total $15,000. Other monthly fixed costs of the company total $12,000.

Required:

a.What is the break-even level in tires?

b.What is the margin of safety assuming sales total $90,000?

c.What is the break-even level in tires assuming variable costs increase by 20 percent?

d.What is the break-even level in tires assuming the selling price goes up by 10 percent, fixed manufacturing costs decline by 10 percent and other fixed costs decline by $150?

37) Query Company sells pillows for $25.00 each. The manufacturing cost, all variable, is $10 per pillow. The company is planning on renting an exhibition booth at the annual crafts and art convention. The convention coordinator allows three options for each participating company. They are:

1.paying a fixed booth fee of $5,010, or;

2.paying an $4,000 fee plus 10% of revenue made at the convention, or;

3.paying 20% of revenue made at the convention.

Required:

a.Compute the break-even sales in pillows of each option.

b.Which option should Query Company choose, assuming sales are expected to be 800 pillows?

c.Calculate the margin of safety for Option 1 if sales are expected to be 300 pillows.