Can we break the Shannon capacity?

Managerial accounting calculating cost and break even?

• a) Husky Limited manufactures and sells highly faddish products directed toward the preteen market. A new product has come onto the market that the company is anxious to manufacture and sell. Total fixed costs will amount to $60,000 per month. The company's controller projects an operating loss of $15,000 if the company manufactures and sells 30,000 units of the new product per month. Calculate the monthly break-even sales for the new product in units. b) Assume that Husky Limited has available capacity of only 35,000 units per month. Additional capacity can be rented from another company at an additional fixed cost of $20,000 per month to manufacture up to another 50,000 units of the new product monthly. The variable costs to manufacture and sell units of the new product made in the rented facility will be higher at $3.75, due to somewhat less efficient operations than in the company's own plant. The new product, however, will sell for $4.50 per unit, regardless of where it is manufactured. How many units will Husky need to produce and sell each month if their desired pre-tax profit is $7,000 per month and they plan to use their own facilities first before renting any additional space? c) Assume that there is no capacity constraint at Husky’s own facility and all units are produced there. If Husky sells 50,000 units per month what is the degree of operating leverage?

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