Answer:
$39.2
Explanation:
From the information provided, you can ue the following formula to find the price that Jacki will need to reach her target profit of $60,000 per year:
Profit= sales-Variable costs-fixed costs
The sales are equal to the quantity sold for the price per unit and the variable costs are equal to the quantity sold for the variable cost per unit.
Then, the statement says that the sells will increase 25%, so:
10,000*1.25= 12,500
Now, you can replace the formula and isolate the price per unit to find the answer:
Profit= 60,000
Sales= 12,500
Variable costs per unit= 20+8= 28
Fixed costs= 80,000
60,000= (12,500*p)- (12,500*28)-80,000
60,000= 12,500p-350,000-80,000
60,000=12,500p-430,000
60,000+430,000= 12,500p
490,000=12,500p
p=490,000/12,500
p= 39.2
If Jacki increases the quality of the stones, she will need to charge $39.2 to attain her target profit of $60,000 per year.
