Question

In: Finance

. Smith Inc. produces and sells bicycles. They are expecting to sell 95,000 units this year....

. Smith Inc. produces and sells bicycles. They are expecting to sell 95,000 units this year. Their variable costs are $123 per unit and their fixed costs are $9,205,000. a. If they would like to earn 25% per unit, at what price should they sell the bicycles? b. What price should they set to earn 25% if the fixed costs were $8,000,000? c. What if the fixed costs were $8,000,000 and they want to earn 30% per unit?

Solutions

Expert Solution

a)

The selling price per unit of bicycle should be $274.87

b)

The selling price per unit of bicycle should be $259.01

c)

The selling price per unit of bicycle should be $269.37

jeff jeffy answered 1 year ago
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