A business has the capacity to manufacture 600 electronic components per annum that it sells for $500 each. The variable costs are $250 per component and the fixed costs are $100,000 per year.

a. What quantity should it sell in a year to earn a net income of $60,000 per year?

b. c. What is the net income per year at capacity? Calculate the quantity that it needs to sell to earn a net income of $60,000 per year if the selling price of the component is reduced by 10% and variable costs are increased by 10%.

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