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Problem:
Fellwell is a company producing ?ight safety parachutes for drones. The cost of producing a parachute can be breakdown into ?xed cost of $50000 per year and variable cost of $200 per parachute.
(a) Explain how gross pro?t from selling parachute can be computed.
(b) If the company sold the parachute harness at $300 per harness, what is the minimum sales quantity per month for the company to break even?
(c) If the company decides to sell the harness at $450 per harness, what is the minimum sales quantity per month to break even?
(d) What are the factors that affect whether the company could price its parachute harness at $450 instead of $300?
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