Question

Adams Enterprise produces a product with fixed costs of $45,400 and variable costs of $2.90 per unit. The xompany desires to earn a $23,000 profit and believes it can sell 12,000 units of the product.

Based on this information, determine the target sales price.

Answer 1

• All working forms part of the answer
• Correct Answer = $ 8.60 = Target Sale Price

A	Target Profits	$23,000
B	Fixed Cost	$45,400
C = 12000 units x $ 2.90	Variable cost total for 12000 units	$34,800
D = A+B+C	Total Sales Revenue required	$103,200
E	Total units to be sold	12,000
F = D/E	Target Sales Price	$                  8.60 = Answer