2 years ago

Compute the selling price if variable costs are $16 per unit. Determine the formula used to calculate the selling price.

Business

1 answer:

dezoksy [38]2 years ago

3 0

Answer: $40

Explanation:

Selling price can be calculated through the contribution margin equation;

Contribution margin = (Selling Price - Variable cost) / Selling Price

Contribution margin = Fixed costs/break-even point

= 660,000/1,100,000

= 60%

60% = (Selling Price - 16) / Selling Price

Selling price * 60% = Selling price - 16

16 = Selling price - (0.6 * selling price)

16 = Selling price * 40%

16/40% = Selling price

Selling price = $40

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Compute the selling price if variable costs are ​$16 per unit. Determine the formula used to calculate the selling price.

Compute the selling price if variable costs are $16 per unit. Determine the formula used to calculate the selling price.