Question

After substantial marketing research, Taoyuan Corporation management believes that it can make and sell a new battery with a prolonged life for laptop computers. Management expects the market demand for its new battery to be 50,000 units per year if the battery is priced at $80 per unit. A team of engineers and accountants determines that the fixed costs of producing 35,000 units to 65,000 units is $1,250,000.

Required
Assume that Taoyuan desires to earn a $750,000 profit from the battery sales. How much can it afford to spend on the variable cost per unit if production and sales equal 50,000 batteries?



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  • CreatedFebruary 07, 2014
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