Answered step by step
Verified Expert Solution
Question
1 Approved Answer
ZZZ Company produces and sells three products. Information about these products for the month of May is given below: Product A Product B selling price
ZZZ Company produces and sells three products. Information about these products for the month of May is given below: Product A Product B selling price per unit $16 $14 variable costs per unit $ 7 $ 6 number of units sold 20,000 25,000 Product C selling price per unit $20 variable costs per unit $15 number of units sold 24,000 ZZZ Company reported total fixed costs of $166,000 in May. In order to improve profitability, ZZZ Company made the following changes in June: 1. adjusted the selling price of Product B 2. increased the advertising for Product B by $30,000 These changes resulted in the number of units of Product B that were sold doubling. However, these changes also resulted in the sales of Product A decreasing by 30% as some customers started buying Product B instead of Product A. Assume the sales of Product C were not impacted by these changes. Calculate the selling price per unit for Product B needed in June in order for the June net income to be the same as the May net income.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started