Question: Please show all your work and answer the questions for full marks. A small business owner is contemplating the addition of another product line. Capacity

Please show all your work and answer the questions for full marks.

A small business owner is contemplating the addition of another product line. Capacity increases and equipment will result in an increase in annual fixed costs of $50,000. Variable costs will be $25 per unit.

(i) What unit selling price must the owner obtain to break-even on a volume of 2,500 units a year?

(ii) Because of market conditions, the owner feels a revenue of $47 is preferred to the value determined in part a. What volume of output will be required to achieve a profit of $16,000 using this revenue?

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