Question
The firm needs to compute a new price for the product when BOTH variable costs per unit and total fixed costs are changing at the
The firm needs to compute a new price for the product when BOTH variable costs per unit and total fixed costs are changing at the same time. The current price per unit is $38 with current variable cost per unit of $1. Current fixed cost is $3467 per month. To stay competitive the firm will have to rent an additional stamping machine that will add $874 per month to the fixed costs. The current sales level is 646 units per month. Variable costs will increase by $2 per unit due to an increase in processing cost. Assuming sales in units stays the same, what price should be charged to make the same profit as before all the changes?
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