Luxury Mills is a small producer of cashmere yarn, which it sells to clothing manufacturers for sweaters, coats, scarves, and other cashmere clothing. The company currently sells its yarn at $20 per unit, but costs have gone up, and the company would like to raise its prices. Further, Luxury Mills' yarn is of higher quality than that of most competitors, and the company's marketing executives feel the company can justify charging a premium price. The company's fixed costs per month are $40,000. This includes building and equipment leases, administrative expenses, salaries, and utilities. The company's variable costs for each unit of yarn produced is $10. This includes the cost of raw cashmere wool and the chemicals and dyes used to treat the wool. Choose the answer below that represents Luxury Mills' current breakeven point in units of yarn the company needs to sell each month, and the new breakeven point if Luxury Mills raises its price from $20 to $30 per unit. 2,000; 1,333 4,000; 2000 2,000; 4000 1,333; 2,000

Luxury Mills is a small producer of cashmere yarn, which it sells to clothing manufacturers for sweaters, coats, scarves, and other cashmere clothing. The company currently sells its yarn at $20 per unit, but costs have gone up, and the company would like to raise its prices. Further, Luxury Mills' yarn is of higher quality than that of most competitors, and the company's marketing executives feel the company can justify charging a premium price. The company's fixed costs per month are $40,000. This includes building and equipment leases, administrative expenses, salaries, and utilities. The company's variable costs for each unit of yarn produced is $10. This includes the cost of raw cashmere wool and the chemicals and dyes used to treat the wool. Choose the answer below that represents Luxury Mills' current breakeven point in units of yarn the company needs to sell each month, and the new breakeven point if Luxury Mills raises its price from $20 to $30 per unit. 2,000; 1,333 4,000; 2000 2,000; 4000 1,333; 2,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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