Answer:
The selling price per case is $75
Explanation:
Sue Bee Honey
Profit is a function of how well a company is able to absorb/cover its costs of doing business.
Thus, to derive Profit we will consider this format;
Sales = xx
Less Variable costs = x
Contribution = xx
Less Fixed Costs = x
gross Profit = xx
Less selling & Admin expense x
Profit = x
Assume sales which is unknown is a
Sales = a
Less Variable costs = 40 x 800,000 = $32,000,000...,.(b)
Contribution = a minus b ..... (C)
Less Fixed Costs = $5,000,000....(d)
gross Profit = c - d.....….(e)
Less fixed selling & Admin expense = $3,000,000.......(f)
Less Variable selling expense = 25% x (a)...…g
Profit = $5,000,000
Stretching this out in a mathematical format.
5,000,000 + 3,000,000 + 5,000,000 + 32,000,000 = a - 25% of a = 0.75a
$45,000,000 = 0.75a
a = Sales = 45,000,000/0.75 = $60,000,000
To derive selling Price:
Divide sales by sales units = $60,000,000 / 800,000 = $75 per unit
