Tom Roberts, CEO of lawnmower manufacturer Grassy Knowles, who has licensed software from the makers of Roomba in order to create the first self-directed, programmable lawnmower; he has branded this new mower the Goat. Knowles anticipates that fixed costs, including the plant and robotic assembly, will be $18 million for the first year. Projected sales for the first year are 90,000 units. Unit variable costs, including all mechanical and technical parts plus the licensing fee (contracted on a per-unit basis), add up to $1100 per mower. Using these parameters, project the price Tom would need to charge to breakeven. Show all calculations .
Let R be the price Tom needs to charge to break-even.
Fixed cost = $18000000
Variable cost per mower, v =$1100
Quantity = 90,000 units
At break-even point, TR = TC
R*Q = Fixed cost +(v*Q)
R*90000 = 18000000+(1100*90000)
Solving, R = $1300
The price Tom needs to charge to break-even = $1300 per unit.
Tom Roberts, CEO of lawnmower manufacturer Grassy Knowles, who has licensed software from the makers of...
om Roberts, CEO of lawnmower manufacturer Grassy Knowles, who has licensed software from the makers of Roomba in order to create the first self-directed, programmable lawnmower; he has branded this new mower the Goat. Knowles anticipates that fixed costs, including the plant and robotic assembly, will be $18 million for the first year. Projected sales for the first year are 90,000 units. Unit variable costs, including all mechanical and technical parts plus the licensing fee (contracted on a per-unit basis),...
Tony Knowles, CEO of lawnmower manufacturer Grassy Knowles LLC, has licensed software from the makers of Roomba in order to create the first self-directed, programmable lawnmower; he has branded this new mower the Goat. Knowles anticipates that fixed costs, including the plant and robotic assembly, will be $18 million for the first year. Projected sales for the first year are 90,000 units. Unit variable costs, including all mechanical and technical parts plus the licensing fee (contracted on a per-unit basis),...