In: Accounting
Minden Company introduced a new product last year for which it
is trying to find an...
Minden Company introduced a new product last year for which it
is trying to find an optimal selling price. Marketing studies
suggest that the company can increase sales by 5,000 units for each
$2 reduction in the selling price. The company’s present selling
price is $98 per unit, and variable expenses are $68 per unit.
Fixed expenses are $831,600 per year. The present annual sales
volume (at the $98 selling price) is 25,000 units. Required: 1.
What is the present yearly net operating income or loss? 2. What is
the present break-even point in unit sales and in dollar sales? 3.
Assuming that the marketing studies are correct, what is the
maximum annual profit that the company can earn? At how many units
and at what selling price per unit would the company generate this
profit? 4. What would be the break-even point in unit sales and in
dollar sales using the selling price you determined in (3) above
(e.g., the selling price at the level of maximum profits)?
What is the present yearly net operating income or loss?
What is the present break-even point in unit sales and in dollar
sales? (Do not round intermediate calculations.)
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Break-even point in units |
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Break-even point in dollar sales
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Assuming that the marketing studies are correct, what is the
maximum annual profit that the company can earn? At how many units
and at what selling price per unit would the company generate this
profit?
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Maximum annual profit |
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Number of units |
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Selling price per unit |
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What would be the break-even point in unit sales and in dollar
sales using the selling price you determined in Required (3) (e.g.,
the selling price at the level of maximum profits)? (Do not round
intermediate calculations.)
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|
|
Break-even point in units |
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Break-even point in dollar sales |
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