Question

ampus Intro to MX Mw anon Camp X MH Campus GC-troto X M o tion Camp Chapter Home M M o d + 0 c e tomheducation.com .px?_=0.39477371736176181500905704232 pace the Minden company introduced a new product last year for which it is trying to an optimal seling price Marketing studies that the company can increases by 5.000 for each seduction in the s company's present seling prices sro per un and anable expenses $10 per un Fred expenses are $60,000 per year. The presenta umetne so se poes 15.000 1. What is the present yearly net operating income or loss? Net operating loss 590.000

Need help on 3 and 4

Answer 1

3. What is the maximum annual profit that the company can earn and how many units and selling price per unit.

No. of Units	15,000	20,000	25,000	30,000	35,000	40,000	45,000	50,000	55,000
Selling Price	$70	$68	$66	$64	$62	$60	$58	$56	$54
Variable Cost Per Unit	$40	$40	$40	$40	$40	$40	$40	$40	$40
Contribution Per Unit	$30	$28	$26	$24	$22	$20	$18	$16	$14
Contribution	$450,000	$560,000	$650,000	$720,000	$770,000	$800,000	$810,000	$800,000	$770,000
Fixed Cost	$540,000	$540,000	$540,000	$540,000	$540,000	$540,000	$540,000	$540,000	$540,000
Profit/(Loss)	($90,000)	$20,000	$110,000	$180,000	$230,000	$260,000	$270,000	$260,000	$230,000

As fixed costs remain constant, the maximum contribution margin occurs when the company sells 45,000 units with selling price of $58. At this price, the maximum annual profit = $270,000

Maximum Profit	$270,000
Number of Units	45,000 Units
Selling price	$58

4.What would be the break even point in unit sales and in dollar sales using the selling price above

Break Even Point Sales = Total Fixed Cost / Contribution per Unit

Contribution per unit at above selling price is $18

= $540,000 / $18

= 30,000 Units

Break Even Sales in dollars = break Even Sales X Selling price per unit

= 30,000 Units X $58

= $1,740,000

Break even Sales in units	30,000 units
Break Even sales in dollars	$1,740,000