Rainbow shoes company is contemplating producing a new pair of mountain climbing boots that would sell for $150 per pair. The per-unit variable cost is $80 and the fixed cost per year allocated to this product is $70,000. The manager estimates that annual sales of this product would have a mean of 10,000 units with a standard deviation of 2,000 units.
a) What is the breakeven point?
b) What is the probability of at least breaking even?

c) What volume must be sold to obtain a profit of $500,000?
d) What is the profit when 12,000 pairs are sold?

Question

Rainbow shoes company is contemplating producing a new pair of mountain climbing boots that would sell for $150 per pair. The per-unit variable cost is $80 and the fixed cost per year allocated to this product is $70,000. The manager estimates that annual sales of this product would have a mean of 10,000 units with a standard deviation of 2,000 units. 
a) What is the breakeven point? 
b) What is the probability of at least breaking even? 

c) What volume must be sold to obtain a profit of $500,000? 
d) What is the profit when 12,000 pairs are sold?