2. Annually (10000) units of a product are sold at a price of (12$) per unit, the amount of fixed costs is ($40000) and the annual profit is (30000$). The management of the producing company was presented with a new design that increases fixed costs by (10%) and variable costs by (20%), in return for increasing sales to reach (12,000) annual units. At what price must the product be sold in order for the profit to increase by a third? What is the volume of production at which the realized returns will be equal to the costs for the two cases?

2. Annually (10000) units of a product are sold at a price of (12$) per unit, the amount of fixed costs is ($40000) and the annual profit is (30000$). The management of the producing company was presented with a new design that increases fixed costs by (10%) and variable costs by (20%), in return for increasing sales to reach (12,000) annual units. At what price must the product be sold in order for the profit to increase by a third? What is the volume of production at which the realized returns will be equal to the costs for the two cases?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 7P

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