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Healthco Natural Products produces chemical additives for vitamin and supplement distributors. When their Blueberry antioxidant compound lost its patent, Healthco had invested $500,000 to obtain
Healthco Natural Products produces chemical additives for vitamin and supplement distributors. When their Blueberry antioxidant compound lost its patent, Healthco had invested $500,000 to obtain FDA approval and $100,000 to maintain certification of its one production lines for this product. Set up and Production costs for the antioxidant are estimated to be $2,000,000. Marginal costs for each capsule are $0.10 and they sell for $0.40 per capsule. But many firms have entered and now make similar antioxidants causing sales to fall off. Healthco anticipates that it could use this production line for other additive supplements which will be losing patent protection soon. 1) If forecasted sales are 5 million capsules, what is the breakeven price? 2) Should Healthco discontinue selling this product? Show your calculations and explain you
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