Old product plus persuasion plan to double present profit

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Reference no: EM13856645

Prices are going up. Rather than just increase the prices tag on the present product. "Dooper cleaner", the plan is to put the same product in a new box and call it "Super Dooper Cleaner". The new container will be introduced by an extravagant publicity program. Current sales are 1,000,000 boxes a year at $1 per box. Fixed costs are $300,000 and variable costs are 0.60 per unit. It is anticipated that neither sales volume nor variable costs will increase, but the publicity campaign will double fixed costs.

A. If the new price is $1.29 per box, what is the next break-even point?

B. How many boxes above present sales would have to sold under the "old product plus persuasion" plan to double the present profit?

Reference no: EM13856645

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