Question

Question 1: Savvy Sneakers has designed a fitness app. They estimate price and quantity demands for this app as follows:

Price	Quantity
2.99	300,000
3.99	240,000
4.99	110,000

The costs of maintaining and delivering the app include $140,000 of fixed costs. Variable costs are $0.50 per download.

What price will yield the greatest profit?

Question 2:

Geo Resources is exploring the production of an interactive world map to be used in education. They estimate variable costs of of $50 per unit and fixed costs of $160,000.

Assuming sales of 3,500 units, what is the full cost and what is the price with a 20% markup?

Question 3:

OfficeWorks is designing an iris scanning time clock. Employees will stand in front of the device and the device will scan their eye for proper identity at clock in and clock out. The device will sync with the company's payroll software. Similar products on the market are selling for $3,600 per unit. If the company requires a profit of 25% of the selling price, what is the target cost per unit?

The team estimates fixed costs will be $550,000 and variable costs per unit will be $1,250. How many units must be produced and sold to meet the target cost per unit? (Round up to the nearest whole unit).

Answer 1

1. The price of $3.99 will yield the greatest profit of $697600.

Quantity	300000	240000	110000
Selling price per download $	2.99	3.99	4.99
Variable cost	0.50	0.50	0.50
Contribution margin $	2.49	3.49	4.49
Total contribution margin $	747000	837600	493900
Less: Fixed costs	140000	140000	140000
Net income $	607000	697600	353900

Per Chegg guidelines, please post independent questions separately. Thank you.