Solution-What is the minimum price that Seville would be

What is the minimum price that Seville would be charge

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Reference no: EM132851030

Question - Seville machine shop fabricates polished steel casings. They currently sell 8,000 casings at a selling price of $110. They have the following cost structure:

Variable costs per unit $40

Fixed costs $350,000

Required -

a. What is the breakeven point in units?

b. Suppose that if they decrease their price to $100, they could increase sales by 10%. What would the change in profit be if they decrease their price to $100?

c. What is the minimum price that Seville would be willing to charge in order to achieve an increase in unit sales of 10% (round to the nearest cent)?

d. Suppose that Seville can purchase a machine that would increase fixed costs to $440,000 and decrease unit variable costs to $28 per unit. At what level of production and sales would Seville be indifferent between the old machine and the new machine?

Reference no: EM132851030

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What is the minimum price that Seville would be charge

Reference no: EM132851030

Reference no: EM132851030

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