Question
Wilkes Manufacturing sells one product with a variable unit cost of $18. The company knows that the price charged will affect demand. Fixed costs are
Wilkes Manufacturing sells one product with a variable unit cost of $18. The company knows that the price charged will affect demand. Fixed costs are $265,000. If sales exceed 50,000 units, the company will need to lease additional manufacturing space and equipment at an additional cost of $30,000 per year. The following chart represents the estimated demand at various price levels:
Units Demanded Unit Price
25,000 $30
50,000 $28
75,000 $25
100,000 $23
Based on this information which of the following statements is true?
Selling the units at $23 per unit will generate the largest profit. | ||
Selling the units at $28 per unit will generate the largest profit. | ||
Selling the units at $30 per unit will generate the largest profit. | ||
Selling the units at $25 per unit will generate the largest profit. | ||
None of the above |
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