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Last year Minden Company introduced a new product and sold 14,000 units at a price of $80 per unit. The product's variable expenses are $50
Last year Minden Company introduced a new product and sold 14,000 units at a price of $80 per unit. The product's variable expenses are $50 per unit and its fixed expenses are $523,800 per year.
Required:
- What was this product's net operating income (loss) last year?
- What is the product's break-even point in unit sales and dollar sales?
- Assume the company conducted a marketing study that estimates it can increase annual sales of this product by 5,000 units for each $2 reduction in its selling price. If the company will only consider price reductions in increments of $2 (e.g., $78, $76, etc.), what is the maximum annual profit it can earn on this product? What sales volume and selling price per unit generate the maximum profit?
- What would be the break-even point in unit sales and dollar sales using the selling price you calculated in requirement 3?
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