Homework SoursePlease help me solve Sales Price per Product given the follo
Please help me solve Sales Price per Product given the following information...
| SP/P | ? |
| VC/P | 400 |
| TFC | 5,000,000 |
| Q | 20,000,000 |
| ITR | 20% |
| EAIT | 6,000,000 |
Solution
EAIT = 6000000
ITR = 20%
Therefore earning before tax = 6000000/(1-0.20) =7500000
Total contribution margin = earnings before tax + Fixed cost = 7500000+5000000 =12500000
Total contribution margin = (selling price per unit - variable cost per unit) * Q
12500000= (SP - 400)*20000000
12500000=20000000SP - 8000000000
20000000SP = 8012500000
SP = 8012500000/20000000 = 400.625
SP /P = 400.625
