An automobile spare part is sold for $20/unit. The VC are $4/unit, 20000 units of the...

 

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An automobile spare part is sold for $20/unit. The VC are $4/unit, 20000 units of the product are sold annually and a profit of $100,000 is made. The change to be made in the design of the product will increase the VC by 20% and the FC by 10%, and the sales amount will increase to 25000 units. a) At what selling price do we break even? b) What is the annual profit when the selling price remains the same ($20/unit)? An automobile spare part is sold for $20/unit. The VC are $4/unit, 20000 units of the product are sold annually and a profit of $100,000 is made. The change to be made in the design of the product will increase the VC by 20% and the FC by 10%, and the sales amount will increase to 25000 units. a) At what selling price do we break even? b) What is the annual profit when the selling price remains the same ($20/unit)?

Answer rating: 100% (QA)

Solution We need to calculate the selling price Original Variable Cost per unit VC 4 Original Fixed ... View the full answer