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Price to Charge for $90,000 Profit

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A company produces and sells 4,000 units of a product that has a contribution margin of $6 per unit. The Co. sells the product for a sales price of $20 per unit. Fixed costs are $18,000. The company is considering investing and that would decrease the variable cost per unit to $8 per unit and double total fixed costs. The company expects to increase production and sales to 9,000 units of product. What sales price would have to be charged to earn $90,000 target profit?

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Attached Word and Excel files look at a situation where a company is undergoing changes, including investing and increasing production, and calculates the final sales change necessary to reach their target profit.

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A company produces and sells 4,000 units of a product that has a contribution margin of $6 per unit. The Co. sells the product for a sales price of $20 per unit. Fixed costs are $18,000. The company ...

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  • MBA, California State University, Sacramento
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