Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Notprepared and Unsure Inc. manufacture widgets which are sold thorough wholesalers and hardware stores. Their current monthly operating data are as follows: Sales 6,000 units
Notprepared and Unsure Inc. manufacture widgets which are sold thorough wholesalers and hardware stores. Their current monthly operating data are as follows: Sales 6,000 units Price (Wholesale) $10.00 Variable Cost (per unit) $4.00 Fixed Cost (per month) $30,000 NUI is contemplating a 10% price reduction to spur sales. 1. What is the percent break-even sales change? [Show calculations] 2. What is the unit break-even sales change? [Show calculations] NUI had commissioned a study last month to estimate the price elasticity for widgets in its current market. The study suggested that the price elasticity for widgets was between -1.3 and -1.5. 3. Do you recommend NUI proceed with the proposed price cut? Why or why not
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started