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Breakeven point & operating income calculation
ABC company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that ABC can increase sales by 12000units for each $3 reduction in the selling price. The comp. Present selling price is $70per unit, variable cost $40per unit, fixed exp. $450000 per year. The present annual sales volume is $25000 units.
A. What is the present yearly operating income or loss? B. What is the present breakeven point in unit and in dollar sales? C. Assuming that the marketing studies are correct what is the max. Operating income that ABC can earn yearly? D. At how many units and at what selling price per unit would ABC generate the operating income you determined in (C) . |
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