Many times the selling price of a product p, is related to demand D, according to the relationshipp=a - bD. However, a company has found that the price of their product can be related to demand (in unitsper year) according to the following equation: p=108.5 – 2.08D⁰.75. In addition, there is a fixed cost ofP50,000 per year and the variable cost tomanufacture the product is P68 per unit.What is the level of demand which maximizes sales? What is the maximum sales?What level of demand maximizes profit? What is the maximum profit?What are the breakeven quantities of this product if p=678.39-1.08D?

Solution Given demand equation: p=108.5-2.08D0.75=108.5-1.56D Cost equation(TC)= 50,000+ 68D Profit…

Answered: Many times the selling price of a…

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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