Question: A defense contractor has been able to summarize its total annual fixed costs as $100,000 and the total variable cost per unit of production as

  1. A defense contractor has been able to summarize its total annual fixed costs as $100,000 and the total variable cost per unit of production as $33. (a) If only 5000 units is all that is expected to sell to the government this year what should the per unit selling price be to make a 25% profit this year? (b) If foreign sales of 3000 units per year is to be added to the 5000 units government contract above and a 25% profit is acceptable for this contractor again, what could be the new selling price per unit?

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