A civil engineer has been promoted to manager of engineered public systems. One of the products is an emergency intercept pump for potable water. If the tested water quality or volume varies by a preset percentage, the pump automatically switches to preselected options of treatments or water sources. The manufacturing process for the pump had the following fixed and variable costs ovr a 1-year period.
Fixed Costs, $Variable Costs, $/Unit
Administrative 30,000 Materials 2500
Salaries and Benefits 20% of 350,000 Labor 200
Equipment 100,000 Indirect Labor 2000
Space, Utilities 55,000 Subcontractors 800
Computers 1/3 of 150,000
(a) Determine the minimum revenu per unit to break even at the current production volume
of 5000 units per year.
(b) If selling internationally and to large corporations is pursued, an increased production of 3000
additional units will be necessary. Determine the revenu per unit required if a profit goal of $500,000
is set for the entire product line. Assume the cost estimates above remain the same.
Determine the revenue per unit in the case.