Question: A product currently sells for $18 per unit. The variable costs are $6 per unit, and 10,000 units are sold annually and a profit of

A product currently sells for $18 per unit. The variable costs are $6 per unit, and 10,000 units are

sold annually and a profit of $25,000 is realized per year. A new design will increase the variable costs

by %20 and Fixed Costs by %15 but sales will increase to 12,000 units per year.

Apply the cost analysis techniques to find out

3

(a) At what selling price do we break even?

(b) What will be the annual profit with this change?

(b) What will be the annual profit, if the selling price is not changed?

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