The manager of Calypso, Inc. is considering raising its current price of $30 per unit by 10%. If she does so, she estimates that demand will decrease by 20,000 units per month. Calypso currently sells 50,000 units per month, each of which costs $25 in variable costs. Fixed costs are $180,000. Assume the manager does not know how much demand will drop if the price increases. By how much would demand have to drop before the manager would not want to implement the price increase? CA. 18,750
The manager of Calypso, Inc. is considering raising its current price of $30 per unit by 10%. If she does so, she estimates that demand will decrease by 20,000 units per month. Calypso currently sells 50,000 units per month, each of which costs $25 in variable costs. Fixed costs are $180,000. Assume the manager does not know how much demand will drop if the price increases. By how much would demand have to drop before the manager would not want to implement the price increase? CA. 18,750
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The manager of Calypso, Inc. is considering raising its current price of $30 per unit by 10%. If she does so, she estimates that
demand will decrease by 20,000 units per month. Calypso currently sells 50,000 units per month, each of which costs $25 in
variable costs. Fixed costs are $180,000.
Assume the manager does not know how much demand will drop if the price increases. By how much would demand have to
drop before the manager would not want to implement the price increase?
A. 18,750
B. 18,900
OC. 19,000
D.2,000
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