RanBaxy Pharmaceuticals Inc. (subsidiary of SUN PHARMA Company, Princeton, NJ) is currently manufacturing a drug that has

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RanBaxy Pharmaceuticals Inc. (subsidiary of SUN PHARMA Company, Princeton, NJ) is currently manufacturing a drug that has a variable cost and selling price of $1.20 per unit $2.00 respectively (in U.S. dollars). The current fixed costs are $25,000, and the sales volume is 25,000 units. The company is considering adding new equipment to the production that can improve the production efficiency of this drug. The new equipment will add an additional $9,000 to the fixed cost, and variable cost per unit would decrease to $1.00. At what sales volume would adding this new equipment be profitable?

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Operations Management Managing Global Supply Chains

ISBN: 978-1506302935

1st edition

Authors: Ray R. Venkataraman, Jeffrey K. Pinto

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