Answer:
Mean of total cost = $350,000
Standard deviation of total cost = $16,000
Selling price of the bottle on average should be $14
The selling price of the bottle on average should be $14.8
Explanation:
Mean of total cost =((Mean of bottle × Variable cost per unit) + Fixed cost
Mean of total cost = 25,000 × $8 per unit + $150,000
= $200,000 + $150,000
= $350,000
Standard deviation of total cost = Standard deviation × Variable cost per unit
= 2,000 × $8
= $16,000
b-1 The break even Total revenue - Total cost = 0
So, we have given equation
25,000 × P - $350,000 = 0
25,000P = $350,000
P = $350,000 ÷ 25,000
= $14
b-2 For making profit of $20,000, the equation
Total revenue - Total cost = $20,000
25,000 × P - $350,000 = 20,000
25,000P = 20,000 + $350,000
25,000P = $370,000
P = $370,000 ÷ 25,000
= $14.8
The selling price of the bottle on average should be $14.8
