I am working on an assumption to find what the maximum profits would be. I have run 8 trials and I'm not getting any profits, I'm not sure where I have gone wrong.
(See attached file for full problem description)
Current Conditions --
Fixed expenses (for the year)
Annual Sales Volume
(at $70 per unit)
Market Suggestions --
Increase Sales by 5,000 units for each
$2.00 reduction in selling price
3. Assuming that the marketing studies are correct, what is the maximum profit that the company can earn yearly?
At how many units and at what selling price per unit would the company gererate this profit?
What I did was take the Contribution margin per ratio and keep reducing it by $2 for every 5,000 units that I added to selling.
The solution explains how to calculate the maximum profit that can be earned.