Pls help on #1, #2, and #4. I attempted to do my #3 is #3 correct? Minden Compan
ID: 2415889 • Letter: P
Question
Pls help on #1, #2, and #4.
I attempted to do my #3 is #3 correct?
Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each S2 reduction in the selling price. The company's present selling price is $96 per unit, and variable expenses are 586 per unit. elling price. The company's present Fixed expenses are $831.000 per year. The present annual sales volume (at the S selling price) is 25,600 units 25,800 units.Explanation / Answer
1) Net loss = (96-66)25,600 - 831,000 = -63,000
2) BEP(units ) = $831,000/30 = 27,000 units
BEP(sales) 27,700*96 = 2,659,200
3) Maximum profit = 181,000
For this we need to counter check for example if n = 3
25,600 + 5000 *3 = 40,600 units
(96 - 3*2 - 66) 40,600 - 831,000 = 143,400 profit
2) If n = 4
45,600(88-66) - 831,000 = 172,200 profit
3) if n - 5
then profit = 181,000
4) if n = 6 profti = 169,800
so at n =5 the profit is maximum
4)BEP = 831,000/20 = 41,550 units
BEP(sales) 41,550*86 = $3,573,300