Crede Company sells a single product that has variable costs of $10 per unit. Fi

Question

Crede Company sells a single product that has variable costs of $10 per unit. Fixed costs will be $700,000 across all levels of sales shown.

Units Sold           Price per unit
80,000                      $35
90,000                      $33
100,000                    $31
110,000                    $30
120,000                    $28


What, if any information given was not relevant to the profit maximization decision?

A) The variable costs per unit
B) The quantities demanded
C) All of the information was relevant
D) The selling prices
E) The total fixed costs

Explanation / Answer

E. The total fixed costs. You sell where marginal cost = marginal revenue. Since fixed costs don't change, they have no impact on marginal costs.

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