Question

Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company's present selling price is $97 per unit, and variable expenses are $67 per unit. Fixed expenses are $837,900 per year. The present annual sales volume (at the $97 selling price) is 25,800 units. Required: 1. What is the present yearly net operating income or loss? 2. What is the present break-even point in unit sales and in dollar sales? 3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)? % Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 What is the present yearly net operating income or loss? Net operating loss 74.400

Answer 1

Anwer _Cykylating_of_present_yearly det_operating come or less 3 Minden company -_Inw me Statement for the year endel_Decembew. 3.),200x Sales (25800 units X $97.) 2502600 - Variable Cojt_625800_units X $67.) (1728600 - Contribution_c$30.2.1) 774000 :- Fixed Cant (837900) - Net loss (63900 تلوعلهم عمووراولاوت دل كمه کله ليوم اونم وعبع ساعه Jolla, saler = Break Ever_Point cin unit sales $ 837900 $ 30 per unit s t 27930 units. jie. ( Eiker cost I contribution per unit) Break-Even Point (in Sollevs). : - Begkeven point X Selling Unit saler Price = 27930 unik $ 2709 210 s $_97 2. If_company_applies present marketing strategy, the maximyn - novel pofit, on what 4914_will be:

25800 I uni 30800 uniti Number of UNLU 35800 4080045800 I unit uni units 50800 unis 55800 units Selling Price 97 95 93 9 89 87 85 30 28 | 26 | 24 | 22 | 20 | 18 Coojbytjog 1 Peu unit 24000 1862400930800 1929200 1100.7600 11016000 1004 400 Coghlution Meno Cypje x Contibution per unit) Fixed cost (697900)||(837900)|(837900) Kk837900)|(833500)| (63700|(837900) 24500 | 92900141300169700 178)00166500 Net Income/163900) loss. From the given above table maximum conkibyton margin and_net 190ome is if company vples 50800 unite _ At this units, selling price is $87 por volt At this point, 491441 profft $178100 and dq dollar 4. Gulation of Bregl- even poigt sales in unit sales_with_above () gluen_so/46704–

- $ 837900 = 41895 units break-Even Point sin units :: $ 20 per unit $87. Beck Even Bint_=_41895 4916 X Leio dellow) : $ 3644865 .. The annons are I peregt net loss PE Recent Beak Event Point in unit - Present areoke Even Point in dollar goles. , o 50300 unik if conany gpolles Ilven strategy $ 87 per unit selling price If congeng qople stop tegy $ 173100 Qanuel maximum profit will end it company applies txategy. 'If company apples glveg strategy Breaker fucy Bigt (19 (units) — Break-Even Rint siz dolles Sales] = 41895_yoita $_3644865.