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Chapter 3 Book Problems

Chapter 3 Book Problems - Chapter 3 Book Problems 1...

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Chapter 3 Book Problems 1. See-Clear Optics is considering producing a new line of eyewear. After considering the costs of raw materials and the cost of some new equipment, the company estimates fixed costs to be \$40,000 with a variable cost of \$45 per unit produced. a) If the selling price of each new product is set at \$100, how many units need to be produced and sold to break even? b) If the selling price of each new product is set at \$80 per unit, See-Clear expects to sell 2,000 units. What would be the total contribution to profit from this product at this price? c) See-Clear estimates that if it offers the product at the original target price of \$100 per unit, the company will sell about 1,500 units. Will the pricing strategy of \$100 per unit or \$80 per unit yield a higher contribution to profit? 2. Med-First is a medical facility that offers outpatient medical services. The facility is considering offering an additional service, mammography screening tests, on-site. The facility estimates the annual fixed cost of the equipment and skills necessary for the service to be \$120,000. Variable costs for each patient processed are estimated at \$35 per patient. If the clinic plans to charge \$55 for each screening test, how many patients must it process a year in order to break even? 3. Tasty Ice cream is a year-round take-out ice cream restaurant that is considering offering an additional product, hot chocolate. Considering the additional machine it would need plus cups and ingredients, it estimates fixed costs to be \$200 per year and the variable cost to be \$0.20. If it charges \$1.00 for each

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Chapter 3 Book Problems - Chapter 3 Book Problems 1...

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