1.(Break-even point) Napa Valley Winery (NVW) is a boutique winery that produces a high-quality, nonalcoholic red wine from organically grown cabernet sauvignon grapes. It sells each bottle for $30. NVW’s chief financial officer, Jackie Cheng, has estimated variable costs to be 70 percent of sales. If NVW’s fixed costs are $360,000, how many bottles of its wine must NVW sell to break even?
2. (Break-even point and operating leverage) Some financial data for each of three firms are as follows:
BLACKSBURG FURNITURE LEXINGTON CABINETS WILLIAMSBURG COLONIALS
Average selling price per unit $ 15.00 $ 400.00 $ 40.00
Average variable cost per unit $ 12.35 $ 220.00 $ 14.50
Units sold 75,000 4,000 13,000
Fixed costs $35,000 $100,000 $70,000
What is the profit for each company at the indicated sales volume?
What is the break-even point in units for each company?
What is the degree of operating leverage for each company at the indicated sales volume?
If sales were to decline, which firm would suffer the largest relative decline in profitability?

For instant digital download of the solution, Please click on the “PURCHASE” link below to get Napa Valley Break Even Point problem complete Answer
For instant digital download of the above solution or tutorial, please click on the below link and make an instant purchase. You will be guided to the PAYPAL Standard payment page wherein you can pay and you will receive an email immediately with a download link.
In case you find any problem in getting the download link or downloading the tutorial, please send us an email on mail@genietutorial.com

 

 

Napa Valley Winery (NVW) is a boutique winery that produces a high-quality, nonalcoholic red wine from organically grown cabernet sauvignon grapes Answer