Cyber Novelties Cyber Novelties is a direct sells company that sells small gadgets over the Internet. The marketing research staff at Cleveland-based Cyber Novelties has developed the following annual sales estimate: Proposed Selling Sales Estimate (Units) Price $8 $10 $15 $20 $24 55,000 22,000 14,000 5,000 2,800 The demand is insensitive below $8. The new product has an annual fixed cost of $60,000 and a variable cost of $7 per unit. 1. Referring to Cyber Novelties above, calculate the elasticity between $10 and $15. 2. What is the breakeven quantity at a price of $10? 3. Referring to Cyber Novelties above, which of the proposed selling prices would generate the largest profit?
Cyber Novelties Cyber Novelties is a direct sells company that sells small gadgets over the Internet. The marketing research staff at Cleveland-based Cyber Novelties has developed the following annual sales estimate: Proposed Selling Sales Estimate (Units) Price $8 $10 $15 $20 $24 55,000 22,000 14,000 5,000 2,800 The demand is insensitive below $8. The new product has an annual fixed cost of $60,000 and a variable cost of $7 per unit. 1. Referring to Cyber Novelties above, calculate the elasticity between $10 and $15. 2. What is the breakeven quantity at a price of $10? 3. Referring to Cyber Novelties above, which of the proposed selling prices would generate the largest profit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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