Question

Last year Minden Company introduced a new product and sold 25.600 units of it at a price of $92 per unit. The product's variable expenses are $62 per unit and its fixed expenses are $839.400 per year Required: 1. What was this product's net operating income (loss) last year? 2. What is the product's break-even point in unit sales and dollar sales? 3. Assume the company has conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g. $68. $66, etc.), what is the maximum annual profit that it can earn on this product? What sales volume and selling price per unit generate the maximum profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price that you determined in requirement 3? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What was this product's net operating income (loss) last year? Net operating loss (71.400) Required 2 >

Answer 1

Part 2

Break-even point in dollars

$2574160

Break-even point in dollars = 27980*92 = 2574160

Part 3

Selling price per unit

$82

25600	92
30600	90
35600	88
40600	86
45600	84
50600	82

Part 4

Break-even point in dollars

$ 3441540

Break-even point in dollars = 41970*82 = 3441540