RST Company has a factory with fixed costs of $750,000 and a production capacity of 200,000 units annually. Its product sells with a 25% contribution margin. The target profit is $450,000. At full production, what does the selling price per unit need to be? Show your complete solution.

RST Company has a factory with fixed costs of $750,000 and a production capacity of 200,000 units annually. Its product sells with a 25% contribution margin. The target profit is $450,000. At full production, what does the selling price per unit need to be? Show your complete solution.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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RST Company has a factory with fixed costs of $750,000 and a
production capacity of 200,000 units annually. Its product sells
with a 25% contribution margin. The target profit is $450,000. At
full production, what does the selling price per unit need to be?
Show your complete solution.

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