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What is the breakeven sales level for eastern decreasing

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Problem - Eastern Semiconductor is currently selling its most popular microchip for $220. It has been selling 4,000 of these chips per month. The company has learned, however, that next month an overseas competitor will enter the market and start selling = copy of this chip for $200. If Eastern maintains its price of $220 per chip, it expects its sales to decrease from 3,000 units per month.

a. Given the Eastern's variable costs for this product are $40 per chip, what is the breakeven sales level for Eastern decreasing its price by $20 price per chip?

b. Do you think it is likely that Eastern will achieve this breakeven sales level?

Reference no: EM132666690

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