Question

Otly tech projected cost information for a new product is as follows: Variable manufacturing costs: $9...

Otly tech projected cost information for a new product is as follows:

Variable manufacturing costs: $9 per unit

Variable selling costs: $3 per unit

Fixed manufacturing costs: $34,000

Fixed selling costs: $50,000

The product is to be sold at $24 per unit

What price would the company have to sell this product for if they wish to sell 10,000 units and realize a profit of $50,000?

Options:

$18

$25.40

$22.50

$5.70

Business   Accounting   
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Homework Answers

Answer #1
Otly Tech
Number of units to be sold 10000
Total fixed costs
Fixed manufacturing cost 34000
Fixed Selling cost 50000
Total 84000
Contribution needed from the sale of 10000 units Fixed Cost + Profit
= 84000 + 50000
134000
We know that Contribution = sales - Variable Cost
134000 = Sales - (9+3)* 10000
Sales = 254000
Sales Price = 25.4
hence Option 2 is correct
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