Question
A company produces packages of 1,000 dog treats per month. The sales price is $4.00 per pack. Variable cost is $1.60 per unit, and fixed
A company produces packages of 1,000 dog treats per month. The sales price is $4.00 per pack. Variable cost is $1.60 per unit, and fixed costs are $1,800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.60 to $1.90 per unit, and fixed costs will increase by 20 %. At what sales price for the new product will the two alternatives (sell as is or process further) produce the same operating income? (Round your answer to the nearest cent.) A. $4.00 B. $4.06 C. $4.66 D. $0.60
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