Posted: April 23rd, 2016

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? Use both the graphical and algebraic approaches.

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? Use both the graphical and algebraic approaches.

(b) If the selling price of the product is set at $80 per unit, See Clear expects to sell 2000 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 1500 units. Will the pricing strategy of $100 per unit or $80 per unit yield a higher contribution to profit?

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