nect html Help Minden Company introduced a new product last

nect html Help Minden Company introduced a new product last year for which it is trying to find an optimal selling price. M that the company can increase sales by 5,000 units for each $2 reduction in the selling price. The company\'s present selling price is $99 per unit, and variable expenses are $69 per unit. Fixed expenses are $839,100 per year. The present annual sales volume (at the $99 selling price) is 25,800 units. arketing studies suggest Required: 1. What is the present yearly net operating income or loss? 2. What is the present break-even point in unit sales and in dollar sales? 3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit? 4. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit? $ 3,049,200 30,800 97 profit

Solution

As per the photoit is assumed that you need answer for requirement 3 only:

Answer for 3)

Maximum profit:$23300

Workings for maximum profit

Number of units (assumed for obtaining maximum profit): 30800 units(I.e 25800 units+5000 units)

Selling price:$97(I.e $99-$2)

Particulars	$
Sales [(25800 unit +5000 units) ×($99-$2)]	2987600
(Less)Variable costs[30800 units×$69]	(2125200)
Contribution	862400
(Less) fixed costs	(839100)
Profit	23300