A product currently sells for $16 per unit. The variable costs are $8 per unit, and 10,000 units are sold annually and a profit of $30,000 is realized per year. A new design will increase the variable costs by %40 and Fixed Costs by %50 but sales will increase to 32,000 units per year. (a) At what selling price do we break even, and (b) If the selling price is to be kept same ($16/unit) what will the annual profit be?

A product currently sells for $16 per unit. The variable costs are $8 per unit, and 10,000 units are sold annually and a profit of $30,000 is realized per year. A new design will increase the variable costs by %40 and Fixed Costs by %50 but sales will increase to 32,000 units per year. (a) At what selling price do we break even, and (b) If the selling price is to be kept same ($16/unit) what will the annual profit be?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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