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lina2011 [118]
3 years ago
14

A defense contractor has been able to summarize its total annual fixed costs as $100,000 and the total variable cost per unit of

production as $33/unit. If only 5000 units is all that is expected to sell to the government this year what should the per
Business
1 answer:
Zielflug [23.3K]3 years ago
7 0

Answer: $66.25

Explanation:

What should the per unit selling price be to make a 25% profit this year?

First, we'll calculate the total cost which will be:

= $100,000 + $5000(33)

= $100,000 + $165,000

= $265000

%profit = 100(revenue - cost)/ cost

25% = 100(revenue - 265000)/265000

Therefore, revenue will be:

265000(1 + 25%) = 331250

265000(1.25) = 331250

Revenue = $331250

Selling price per unit will be:

= $331250/5000

= $66.25/unit

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