Your small toy manufacturing facility has the following information: Fixed costs $10,500 Material cost per toy $0.375 Electricity cost per toy $0.019 Labor cost per toy $0.095 Management demands that we have $6,000 in profit if we sell 40,000 toys. What must the selling price be to achieve this? (Enter three decimal places)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Your small toy manufacturing facility has the following information:
Fixed costs
$10,500
Material cost per toy $0.375
Electricity cost per toy $0.019
Labor cost per toy
$0.095
Management demands that we have $6,000 in profit if we sell 40,000 toys.
What must the selling price be to achieve this? (Enter three decimal places)
Transcribed Image Text:Your small toy manufacturing facility has the following information: Fixed costs $10,500 Material cost per toy $0.375 Electricity cost per toy $0.019 Labor cost per toy $0.095 Management demands that we have $6,000 in profit if we sell 40,000 toys. What must the selling price be to achieve this? (Enter three decimal places)
Expert Solution
Introduction;

Fixed costs = $10,500

Variable cost per unit = $0.375 + $0.019 + $0.095 = $0.489

Profit required = $6,000

Number of units sells = 40,000

Selling price per unit = ?

 

 

We will use break even formula to calculate selling price per unit.

 

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