Last year Minden Company introduced a new product and sold 15,000 untis of it at a price
Question:
Last year Minden Company introduced a new product and sold 15,000 untis of it at a price of $80 per unit. The product's variable expenses are $50 per unit and its fixed expenses are $528600 per year.
Required:
1. What was this products net operating income (loss) last year?
2. What is the product's break-even point in unit sales and dollar sales?
3. Assume the company has conducted a marketing study that estimates it can increase annual sales of this product by 5000 units for each of $2, what is the maximum annual profit that it can earn on this product? What sales volume and selling price per unit generate the maximum profit?
4. What would be the break-even point in unit sales and in dollar sales using the selling price that you determined in requirement 3?
Expert Answer:
Answer 1 The products net operating income last year was 120000 2 The products breakeven point in unit sales is 10800 units and in dollar sales is 864... View the full answer
