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Question
WebTech Development of Austin, Texas, is considering the possible introduction of a new product proposed by its research and development staff. The firm's marketing director estimates the product can be marketed at a price of $70. Total fixed cost is $278,000, and average variable cost is calculated at $48.
1. What is the breakeven point in units for the proposed product?
2. The firm's CEO has suggested a target profit return of $214,000 for the proposed product. How many units must be sold to both break even and achieve this target return? (HINT: what is the "new" fixed amount.)
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