Question

In order to produce a new product, a firm must lease equipment at a cost of $25,000 per year. The managers feel that they can sell 10,000 units per year at a price of $15.00. What is the highest variable cost that will allow the firm to at least break even on this project?

Answer 1

Answer:

Highest variables is $15 it is also a selling price.

GIVEN:

1) Lease equipment at a cost is $ 25,000per year

2) Manager feel that they can sell 10,000 unit per year at a price of $ 15.00

FIND:

1) what is the highest variable cost in this two situation

Step-by-step explanation:

1. sell 10,000 units per year .
2. one unit price is $15.00.
3. lease equipment at a cost is 25,000per year.

so 10,000×15 =150,000 this is call selling price.

* $15 is selling price

And 25,000÷10,000=2.5 this is call lease equipment cost for one unite