For a Widget manufacturer, the fixed cost of his operations is $300,000 per year. The variable cost of each Widget is $10. (a) If the manufacturer requires 20% margin on sale price (not on cost), and can sell 50,000 Widgets a year, at what price should he sale his Widgets? (b) What is his break-even volume at the price you calculated in (a)? (c) If the manufacturer has invested $1 million and wants to get 20% return on his investment by selling Widgets and can sell only 50,000 widgets a year, what price it should charge?

a. $12

b. 300,000 / (12-10) = 300,000 / 2 = $150,000

c. 20% of 1 million = 200,000. 1,200,000 / 50,000 = $24

Are my answers correct?