Question

Network Systems is introducing a new network card. Suppose Network
Systems knows its fixed costs are $600,000, its variable costs are
$500 per card, and it must sell 15,000 cards to break even the first
year. What is the minimum price per unit it should charge?

Accepted Answer

Breakeven= frac{ Fixed  space costs space}{(Price  space pe  space unit - Variable  space costs)} n  Now, 15,000 =  frac{ $600,000}{ $500 - P}  15,000( $500-P) =  $600,000   = $75,00,000 - 15,000P =  $600,000  =-15,000P =  $600,000- $75,00,000  =P =  frac{- $69,00,000}{- $15,000}  = P=  $460  THEREFORE, THE MINIMUM PRICE PER UNIT THAT SHOULD BE CHARGED IS $460

Question #323314

Expert's answer

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