Homework SourseA company that plans to sell 250000 doughnuts at a 1 per dou
A company that plans to sell 250,000 doughnuts at a $1 per doughnut. Fixed costs are $100,000, variable costs are .40 per doughnut. In the coming year they plan to add tarts that would add to their fixed costs by $25,000. The tart\'s variable cost would be $1.80. In addition to selling 250,000 doughnuts they project they\'ll sell 25,000 tarts. What price should they charge if they want to increase profits by $50,000?
Solution
they should charge 4.8 per tart to get additional 50000 profit.
| Required contribution | ||
| a | Fixed costs | 25000 |
| b | Profit | 50000 |
| c= a+b | Required contribution | 75000 |
| d | Number of units sale | 25000 |
| e= c/d | Required contribution per unit | 3 |
| f | variable cost per unit | 1.8 |
| g= e+f | Required selling price per unit | 4.8 |
