Question
3. The total market for a certain type of product made by Benton Products is estimated to be 150,000 units. Benton's marketing department estimates
3. The total market for a certain type of product made by Benton Products is estimated to be 150,000 units. Benton's marketing department estimates that its share of the product's market will depend on its selling price in the following manner: Selling price, $/ unit Market share, % 5.00 6.00 7.00 8.00 9.00 26.0 23.5 20.5 17.0 13.0 10.00 8.5 Benton estimates its fixed cost for production at $100,000 and its variable cost of production at $2.50/ unit. a) What are the break-even points at the different selling prices? Show the results in both tabular and graph (chart) formats. b) How much profit can the company expect to make at the expected sales levels at each of the selling prices? Show the result in both tabular and graph (chart) formats. c) Which of the selling prices should the company select and why?
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