Explore BrainMass

Profit objective

For this question what needs to be calculated first?

A company based in TX markets a range of deluxe fountain pens each initially priced at $25. However, the company is planning a promotion and the price will be reduced to $17. To promote the special price, an advertising campaign costing $ 774 is scheduled . The company's fixed cost , not including advertising are $862 and its variable costs are $ 4.48 each pen.
Assuming the company wished to maintain its profit objective of $900,what must be its new target volume in units?

Solution Preview

Find the total cost and the total revenue at the new promotion price first
Revenue: R = 17x, where x is the number of pens ...

Solution Summary

This shows how to determine target volume to maintain a profit objective.