Question

Clinton Corporation makes lasers. It has recently been offered a government contract from which it may realize a profit. The contract sales price is $225,000 per laser, but the number of units to be sold by Clinton Corporation has not been decided. The company’s fixed costs are budgeted at $5,755,200 and the variable cost per laser is $165,800 per unit.

Using a lighter material, the variable cost can be reduced by $3,316, but the fixed overhead will increase by $121,816. How many units must be produced under this option to earn a profit of $2,000,000 (Rounded)

Based upon the original information, what should the selling price be if the company can only produce and sell 80 lasers, while earning the original profit of $2,000,000?

Based upon the original information, what should the fixed cost be limited to if the company will only produce and sell 80 lasers and expects to earn the original projected profit of $2,000,000. (Rounded)

Answer 1

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