Discourse products makes electrical components

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Reference no: EM132170807

Discourse Products makes electrical components that have multiple uses in industrial manufacturing. The Marketing Director is considering whether or not to implement a price cut and has asked for your advice. You have been provided with the following data:

Current prices = $2.50

Variable costs = $1.00

Fixed costs = $12,000.00

What is the break-even sales volume at the current price of $2.50 per unit? If Discourse Products cuts the price to $2.25 per unit, by how much would sales need to increase for profits to be maintained at the current level? Given the further information that Discourse Products believes that demand for its products is inelastic with respect to price, do you think that it should proceed with a price cut?

Reference no: EM132170807

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