1) A manufacturer is considering incurring $10,000 in research and development costs in order to produce a smarter sensor

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1) A manufacturer is considering incurring $10,000 in research and development costs in order to produce a smarter sensor. The materials and labor costs for the production and sale of this product are $1 per unit. a. Calculate the breakeven sales level for this product if it is priced at $2 per unit. b. Calculate the breakeven sales level for this product if it is priced at $4 per unit. c. Explain the implications of the difference between these two breakeven sales levels. 2. A manufacturer has been selling 50,000 units per year of a certain product. The price of this product is $20 and the variable costs associated with the product are $12 per unit. The manufacturer is considering decreasing the price of his product to $17 so as to increase sales. If he goes ahead with this price change, the manager will purchase new production machinery, at a cost of $75,000, to accommodate the increased sales. a. The manager intends to evaluate the prospective price change by computing a breakeven sales level using the traditional formula, A BE : ?'FC 'lCM .ls he correct? Why or why not? b. If wrong, suggest a more appropriate formula for calculating a breakeven sales level. c. Calculate the breakeven sales level for this prospective price change. d. Use breakeven analysis to help the manager decide whether or not to purchase the new production machinery while keeping the product's price at $20. 3. Eastern Semiconductor is currently selling its most popular microchip for $220. It has been selling 4,000 of these chips per month. The company has learned, however, that next month an overseas competitor will enter the market and start selling a copy of this chip for $200. If Eastern maintains its price of $220 per chip, it expects its sales to decrease from 3,000 units per month. 3- Given the Eastern's variable costs for this product are $40 per chip, what is the breakeven sales level for Eastern decreasing its price by $20 price per chip? b. 00 you think it is likely that Eastern will achieve this breakeven sales level? 4. Plasiderm, |nc., sells a medical product. The company is currently selling the product for $18/unit and is considering whether it could increase profits by increasing the product's price to $20/unit. Plasiderm currently sells 50,000 units per week. Its current weekly operating data are as follows: Sales revenue $900,000 Variable costs $400,000 Fixed costs $250,000 Pretax Profit $250,000 You can assume that per—unit variable costs do not vary with the level of production. a. What is the breakeven sales level for the price increase that Plasiderm is considering? Explain what this breakeven sales level means. b. If the sales level for this product decreased by 5,000 units perweek after the price increase, what would be the change in Plasiderm's weekly pretax profits caused by the price increase? 6- What would be Plasidermrs profit change if, after the price increase, sales remained at 50,000 units per week? 5. A study by economists has determined that the category price elasticity of the consumer car rental market in the United States is -1.25. National car rental is considering lowering the price by 6 percent. 3- lf Hertz, Avis, and the other nationwide car rental companies match National's price cut, what is the sales change that National can expect? Show your work.