Posted: February 1st, 2017

What is the break-even point in units? b. What is the break-even point in dollars? c. What is Cat Harbour’s expected profit for the coming year?

Cat Harbour Fly Fishing Supplies makes a very high quality fly fishing rod and reel. Their fixed costs for the upcoming year are estimated at $200,000. They sell the rod/reel combination for $250 directly to retailers throughout North America and Europe. The company’s variable cost to produce each rod/reel combination is $200. Sales for the coming year are expected to reach $1,250,000.

a. What is the break-even point in units? b. What is the break-even point in dollars? c. What is Cat Harbour’s expected profit for the coming year?

One of the managers at Cat Harbour thinks the sales forecast is too optimistic. She Believes sales are more likely to be about $875,000.

d. What would Cat Harbour’s expected profit be if this forecast is accurate?