Course Solutions Uncategorized Product Currently Sells 12 Per Unit Variable Costs 4 Per Unit 10 000 Units Sold Annually P Q34282707

Product Currently Sells 12 Per Unit Variable Costs 4 Per Unit 10 000 Units Sold Annually P Q34282707

June 27, 2024June 27, 2024| adminadmin| 0 Comment| 6:24 pm
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A product currently sells for $12 per unit. The variable costsare $4 per unit, and 10,000 units are sold annually and a profit of$30,000 is realized per year. A new design will increase thevariable costs by 20% and Fixed Costs by 10% but sales willincrease to 12,000 units per year. (a) At what selling price do webreak even, and (b) If the selling price is to be kept same($12/unit) what will the annual profit be?

Expert Answer

Profit is given by below formula

Profit = S * (SP-VC)-FC

where S is the total sales, SP is the selling price, VC

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