Question
In: Math
What level of output would generate a net income of $15,000 if a product sells for...
What level of output would generate a net income of $15,000 if a product sells for $24.99, has unit variable costs of $9.99, and total fixed costs of $55,005?
Solutions
Expert Solution
Data given:
Selling price of each unit product = $24.99
Variable cost of producing each unit of product = $9.99
Total fixed cost of producing units of product = $55005
Output or number of units to be produced to generate a net income of $15000 = ?
Using the above information, we can find the required level of output as -
Let the required number of units to be produced be "x".
1. Revenue generated by selling "x" units of product can be computed as -
2. Cost of producing "x" units of product can be computed as -
3. Net revenue generated from producing and selling "x" units of product can be computed as -
Thus, the number of units to be produced (output) to generate a net income of $15000 is 4667 units .
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