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Impala Industries manufactures a component used by car manufacturers. Impala can produce 1,000,000 components per year. A foreign car manufacturer has approached Impala with an
Impala Industries manufactures a component used by car manufacturers. Impala can produce 1,000,000 components per year. A foreign car manufacturer has approached Impala with an offer to purchase 120,000 components. Impalas results for last year are as follows:
| Per Unit |
Selling price | $9.00 |
Variable costs | $3.00 |
Fixed costs | $2.50 |
If Impalas current demand from regular customers is 900,000 units. What is the minimum price per unit Impala needs to accept the offer?
$5.50
$4.00
$6.00
$8.00
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