Question

A company produces

1 comma 0001,000

packages of dog treats per month. The sales price is

$ 6.00$6.00

per pack. Variable cost is

$ 1.50$1.50

per​ unit, and fixed costs are

$ 1 comma 800$1,800

per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from

$ 1.50$1.50

to

$ 1.80$1.80

per​ unit, and fixed costs will increase by

1010​%.

At what sales price for the new product will the two alternatives​ (sell as is or process​ further) produce the same operating​ income? (Round your answer to the nearest​ cent.)

A.

$ 6.48$6.48

B.

$ 3.78$3.78

C.

$ 2.70$2.70

D.

$ 6.00

Answer 1

Answer : Option A $6.48