Calculate profit for the year if full cost price is charged

Reference no: EM13920479

Tigger has budgeted to make 50,000 units of its product, timm. The variable cost of a timm is $5 and annual fixed costs are expected to be $150,000.

The financial director of Tigger has suggested that a profit margin of 25% on full cost should be charged for every product sold.

The marketing director has challenged the wisdom of this suggestion, and has produced the following estimates of sales demand for timms.

Price per unit	Demand
$	Units
9	42,000
10	38,000
11	35,000
12	32,000
13	27,000

Required

(a) Calculate the profit for the year if a full cost price is charged.

(b) Calculate the profit-maximising price.

Assume in both (a) and (b) that 50,000 units of timm are produced regardless of sales volume.

Reference no: EM13920479

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