The Crazy Key Company is getting ready to put a new key chain on the market. The raw materials and labor to make the key chain add up to cost $2 per unit, while the machine used to make them costs $1000. To simplify the situation, let us pretend these are the only sources of costs. With this information, answer the following questions.

The amount of unit variable cost for this produc is

The amount of total fixed cost for this product is

The Crazy Key Company executives are arguing over the price of the key chain. They want you to help make the decision. Based on the information you found above and the information given below, find the unit contribution and total contribution for the three price options. In addition, decide which price is the best option.

Price Estimated Sale Units

$4.00 1000 units

$5.00 700 units

$6.00 500 units

At the $4.00 price: Unit Contribution is , Total Contribution is

At the $5.00 price: Unit Contribution is , Total Contribution is

At the $6.00 price: Unit Contribution is , Total Contribution is

To maximize profit, what price do you suggest to the company executives?

To maximize market share, what price do you suggest to the company executives?

If the price is set at $5, find the break even number of units

Suppose Crazy Key Company priced the keys at $5 and aimed to achieve $500 profit in the first month, how many units would they need to sell?

Suppose Crazy Key Company priced the keys at $5 and ended up selling 1000 key chains. With this information please find:

Amt. of Total Revenue:

Amt. of Total Profit: