Question
Ox File Edit Vew Search CH 11 Quiz 6 5/10 Total points awarded Help Newton Company...
ox File Edit Vew Search CH 11 Quiz 6 5/10 Total points awarded Help Newton Company currently produces and sells 6,000 units of a product that has a contribution margin of $5 per unit. The company sells the product for a sales price of $18 per unit. Fixed that would decrease the variable cost per unit to $10 per unit and double total fxed costs. The company expects the new technology to Increase production and sales to 16,000 units of product. What sales price would have to be charged to earn a $80,000 desired proft assuming the investment in technology is made? 6 costs are $16.000. The company is considering investing in new technology 01 points awarded Multiple Choice $10 MacBook Pro 5
Answers
The Answer is $10 per unit
Computation of sales price per unit that would have to be charged to earn a profit of $80,000
Profit = (Selling Price × Units) - (Variable Cost × Units) - Fixed Costs
New Total Fixed Costs: $16,000 x 2 = $32000
New Sales =16000 units
New Variable Cost($18 – 5 – 10) = $3
$80 000 = 16000X - ($3 × 16000) - $32,000
$80 000 = 16000X - $48000 - $32,000
$80 000 = 16000X - $80000
$160000 = 16000X
X = $160000 / 16000
= $10 per unit
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