Question

The following data are for Sophie Wynn Company. Variable cost per unit $12.50 Fixed costs $500,000 Calculate the selling price per unit that must be charged in order to generate a profit of $270,000 with a sales volume of 50,000 units.

Answer 1

Answer:

$27.90 per unit.

Explanation:

Given that,

Variable cost per unit = $12.50

Fixed costs = $500,000

profit = $270,000

sales volume = 50,000 units

Total cost:

= Fixed cost + Variable cost

= $500,000 + ($12.50 × 50,000)

= $1,125,000

Sales revenue:

= cost + profit

= $1,125,000 + $270,000

= $1,395,000

Selling price per unit:

= Sales revenue ÷ Number of units sold

= $1,395,000 ÷ 50,000

= $27.90 per unit.