repare and present a computation which illustrates what price should be selected in order to maximize profits when The company is considering the launch of a new product, component TDX 489 with the following information:

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 5CE: Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and...
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  1. Prepare and present a computation which illustrates what price should be selected in order to maximize profits when The company is considering the launch of a new product, component TDX 489 with the following information:

     

    Standard cost per box

           

    Variable cost

    6,20

           

    fixed cost

    1,60

           

    Total

    7,80

           

    Market research forecast of demand

     

    Selling price

    13

    12

    11

    10

    9

    Demand box

    5000

    6000

    7200

    11200

    13400

    The company only has enough production capacity to make 7000 boxes. However, it would be possible to purchase product TDX 489 from a subcontractor at £7.75 per box for orders up to 5000 boxes and £7 per box if the orders exceed 5000 boxes.
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