Q 3

Jackson Company is trying to determine the optimal price to charge for its PUNCH model. Jackson has fixed costs of $50,000 and the PUNCH has variable costs of $12.00 per unit. Jackson has determined that the following relationships exist between price and demand:

Price Demand

$20 6,875

$19 8,800

$18 10,000

$17 11,000

What is the contribution margin for a price of $20?

$12.00

$10.00

$8.00

$6.00

Q 4

Jackson Company is trying to determine the optimal price to charge for its PUNCH model. Jackson has fixed costs of $50,000 and the PUNCH has variable costs of $12.00 per unit. Jackson has determined that the following relationships exist between price and demand:

Price Demand

$20 6,875

$19 8,800

$18 10,000

$17 11,000

What is the anticipated profit for a price of $18?

$5,000

$10,000

$12,000

$60,000