product currently sells for $12 per unit. The variable costs are $4 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 20% and Fixed Costs by 10% but sales will increase to 12,000 units per year. (a) At what selling price do we break even with the new design?. (b) If the selling price is to be kept same ($12/unit) what will the annual
product currently sells for $12 per unit. The variable costs are $4 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 20% and Fixed Costs by 10% but sales will increase to 12,000 units per year. (a) At what selling price do we break even with the new design?. (b) If the selling price is to be kept same ($12/unit) what will the annual
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A product currently sells for $12 per unit. The variable costs are $4 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 20% and Fixed Costs by 10% but sales will increase to 12,000 units per year.
(a) At what selling price do we break even with the new design?.
(b) If the selling price is to be kept same ($12/unit) what will the annual profit be?
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