. Fong 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 $ 2 reduction in the selling price. The company's present selling price is $ 70 per unit, and variable expenses are $ 40 per unit. Fixed expenses are $ 540,000 per year. The present annual sales volume (at the $70 selling price) is 15,000 units. Assuming that the marketing studies are correct, what will be the optimal selling price that will give the maximum profit for the company? the optimal selling price is set, how many units are expected to be sold?
. Fong 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 $ 2 reduction in the selling price. The company's present selling price is $ 70 per unit, and variable expenses are $ 40 per unit. Fixed expenses are $ 540,000 per year. The present annual sales volume (at the $70 selling price) is 15,000 units. Assuming that the marketing studies are correct, what will be the optimal selling price that will give the maximum profit for the company? the optimal selling price is set, how many units are expected to be sold?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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R. Fong 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 $ 2 reduction in the
selling price. The company's present selling price is $ 70 per unit, and
variable expenses are $ 40 per unit. Fixed expenses are $ 540,000 per
year. The present annual sales volume (at the $70 selling price) is 15,000
units.
Assuming that the marketing studies are correct, what will be the optimal
selling price that will give the maximum profit for the company?
the optimal selling price is set, how many units are expected to be sold?
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