QUESTION ONE

Company N starts production of a new product. The marketing director believes that the market price of a new product can be 25 Eur / unit. He knows that the fixed costs for the production of this product are 132000 EUR, the average variable costs are 19 Eur / unit

How many products need to be sold to reach a breaking point?

If the profit rate is set at 10%, will the target price allow such a profit rate to be set?

QUESTION TWO

Cost+ pricing

UAB Laplandija produces Christmas decorations.

The company's fixed costs are EUR 30,000.

Variable cost per decoration 10 EUR.

5,000 units are expected to be sold

The planned mark-up is 20 percent.

A). Calculate what price the manufacturer will set for one Christmas decoration?

B). UAB Laplandija sells products through intermediaries who want to earn 25 percent. from the selling price. What will be the selling price of Christmas decorations?