Question
Tesla Motors currently sells one product, an electric car known as the C200. Current annual sales are 50,000 units and each car has a contribution
Tesla Motors currently sells one product, an electric car known as the C200. Current annual sales are 50,000 units and each car has a contribution margin of $10,000. Current fixed costs are $100,000,000. Tesla is considering offering an add-on package (which allows the car to fly) for an additional fee of $50,000. A team of five engineers - each with a fixed annual salary of $3,000,000 - will be hired to build and manage the add-on package. Additionally, directmaterial costs for each add-on package will be $5,000. Due to the publicity of offering theadd-on package, sales of the C200 are also expected to increase by 20%.
Taking into account the projected increase in C200 unit sales, how many add-on packages must besold in order to double its current profit? explain with calculation
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