When studying a project, the following variable costs were
estimated for a normal production capacity
of 140,000 units, with a maximum capacity of 200,000 units:
Materials $120,000
Labor $300,000
Other $80,000
Fixed costs are estimated, according to the level of production,
in:
Production
Fixed Cost
0 – 40,000
$320,000
40,001 – 130,000
$380,000
130,001 – 180,000
$420,000
180,001 – 200,000
$500,000
If the selling price of each unit is $15 and the expected
production is 100,000 units per year, what is
the minimum number of additional units that need to be sold at the
price of $11 per unit to show a
profit of $762,000 per year? To raise sales to 120,000 units per
year, how much could be spent
additionally in advertising (fixed cost) so that by maintaining a
price of $15, a profit of
20% on sales?
When studying a project, the following variable costs were estimated for a normal production capacity of 140,000 units,
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