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The fixed cost for a product made by Ironman Corporation is USD 125,000.00, and the variable cost per unit is USD 5.00. Marketing specialists at the company estimate potential sales at 50,000 units for a selling price of USD 10.00 per unit. They also estimate that for every reduction of USD 0.50 in selling price, the company can sell an additional 15 percent of the number at the higher price.
Problem a. What are the break-even points at the different selling prices? Show the results in tabular form.
Problem b. How much profit can the company expect to make at the expected sales level at each of the selling prices? Show the results in tabular form.
Problem c. Which of the selling prices should the company select, and why?
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