Financial Accounting Question Tester Inc. has fixed costs of $300,000 and variable costs are 70% ofthe selling price. To realize profits of $90,000 from sales of 400,000units, the selling price per unit:A. Must be $2.50B. Must be $3.25C. Must be $2.00D. Is indeterminable

To determine the selling price per unit, we can use the following formula: Profit = (Selling Price -…

Answered: Tester Inc. has fixed costs of $300,000…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 7P

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Tester Inc. has fixed costs of $300,000 and variable costs are 70% of the selling price. To realize profits of $90,000 from sales of 400,000 units, the selling price per unit: A. Must be $2.50 B. Must be $3.25 C. Must be $2.00 D. Is indeterminable