Hi I am trying to answer this question but I can not figure out the steps needed
ID: 2424181 • Letter: H
Question
Hi I am trying to answer this question but I can not figure out the steps needed or the equations Minden Company introduced a new product last year for which it is trinbg to find an optimal selling price Marketing studies suggest that the companyn can increase sales by 5000 units for each $2 reduciton in the selling price The copanys present selling rpice is $95 per unit and variable expenses are $65 per unite . Fixed expenses are $830,100 per year. The prsent annual sales volume (at the $95 selling price ) is 25,000 units
I see the examples using the excel sheet but would like the steps in equation form so I can figure it out thanks
Explanation / Answer
Statement showing computations Particulars 25,000.00 30,000.00 35,000.00 40,000.00 45,000.00 50,000.00 55,000.00 60,000.00 65,000.00 70,000.00 75,000.00 80,000.00 85,000.00 90,000.00 95,000.00 100,000.00 Selling Price 95.00 93.00 91.00 89.00 87.00 85.00 83.00 81.00 79.00 77.00 75.00 73.00 71.00 69.00 67.00 65.00 Total Sales 2,375,000.00 2,790,000.00 3,185,000.00 3,560,000.00 3,915,000.00 4,250,000.00 4,565,000.00 4,860,000.00 5,135,000.00 5,390,000.00 5,625,000.00 5,840,000.00 6,035,000.00 6,210,000.00 6,365,000.00 6,500,000.00 Total Variable Costs@65 1,625,000.00 1,950,000.00 2,275,000.00 2,600,000.00 2,925,000.00 3,250,000.00 3,575,000.00 3,900,000.00 4,225,000.00 4,550,000.00 4,875,000.00 5,200,000.00 5,525,000.00 5,850,000.00 6,175,000.00 6,500,000.00 Contribution = Sales- VC 750,000.00 840,000.00 910,000.00 960,000.00 990,000.00 1,000,000.00 990,000.00 960,000.00 910,000.00 840,000.00 750,000.00 640,000.00 510,000.00 360,000.00 190,000.00 - Fixed Costs 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 830,100.00 Income (80,100.00) 9,900.00 79,900.00 129,900.00 159,900.00 169,900.00 159,900.00 129,900.00 79,900.00 9,900.00 (80,100.00) (190,100.00) (320,100.00) (470,100.00) (640,100.00) (830,100.00) Optimal Selling Price is $85 as maximumincome is at 85