See-Clear Optics is considering producing a new line of eyewear. After considering the costs of raw materials and the cost of some new equipment, the company estimates fixed costs to be Php 1,000,000 with a variable cost of 2,000 per unit produced. a. If the selling price of each new product is set at Php 3500, how many units need to be produced and sold to break even? b. If the selling price of the product is set at Php 3000 per unit, See-Clear expects to sell 2000 units. What would be the total contribution to profit from this product at this price? c. See-Clear estimates that if it offers the product at the original target price of Php 3500 per unit, the company will sell about 1500 units. Will the pricing strategy of Php 3500 per unit or Php 3000 per unit yield a higher contribution to profit?
See-Clear Optics is considering producing a new line of eyewear. After considering the costs of raw materials and the cost of some new equipment, the company estimates fixed costs to be Php 1,000,000 with a variable cost of 2,000 per unit produced.
a. If the selling price of each new product is set at Php 3500, how many units need to be produced and sold to break even?
b. If the selling price of the product is set at Php 3000 per unit, See-Clear expects to sell 2000 units. What would be the total contribution to profit from this product at this price?
c. See-Clear estimates that if it offers the product at the original target price of Php 3500 per unit, the company will sell about 1500 units. Will the pricing strategy of Php 3500 per unit or Php 3000 per unit yield a higher contribution to profit?
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