International Data Systems information on revenue and costs is relevant only up to a sales volume of

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International Data Systems’ information on revenue and costs is relevant only up to a sales volume of 105,000 units. After 105,000 units, the market becomes saturated and the price per unit falls from $14.00 to $8.80. Also, there are cost overruns at a production volume of over 105,000 units, and variable cost per unit goes up from $7.00 to $8.00. Fixed costs remain the same at $55,000.

a. Compute operating income at 105,000 units.

b. Compute operating income at 205,000 units.

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Foundations Of Financial Management

ISBN: 9781260013917

17th Edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

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