Question
Alex Happy has developed a new product that he is considering the production and selling of it. To proceed with this project, Alex will
Alex Happy has developed a new product that he is considering the production and selling of it. To proceed with this project, Alex will be renting a small building to rent for $1,800 a month that will house production facilities. One major piece of equipment that will be used to manufacture the product will be rented for $750 a month. Alex purchased all of the other needed tools for $7,200 which will last for two years (depreciation will be $300 per month). Utility cost of building is expected to be $330 per month. Material costs to make the product are estimated at $12.00 per unit. Monthly advertising costs for the product are estimated at $2,500. Alex will be using salespeople for selling the product. Sales commission is $2.50 per unit. Alex has rented a truck for delivery of the products to customer at $800 per month. Alex will be paying himself $6,000 per month as salary for producing the product. Alex believes that he could produce and sell 2000 units per month. Alex is planning to sell each unit at a price of $22 per unit. If Alex increases the planned production to 3000 units per month (which is within capacity), how much would be the amount of profit per unit? Example of Answer: 4.67 or 0.30 or 2.00 (No comma, space, or $ sign Answer: 3.29
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