Question

ATCE Learning Center wants to make a net profit of $650,000 on the manual it sells to schools. The fixed costs for producing the manual are $780,000 and the variable cost per package is $19.85. If the estimated unit sales are 1,250,000 units, what selling price per unit should ATCE try?

$31.29

$19.54

$44.50

$20.99

Answer 1

We are to solve for the price per unit. Let "x" be the price per unit.
The given values are the following:
Variable Cost = 1250,000 *x
Fixed Cost = $780,000
Net Profit = $650,000
Variable cost per unit = $19.85

The solution is shown below:
$650,000 = 1,250,000*x - $780,000 - $1,250,000*$19.85
x = $26, 242, 500 / 1,250,000 units
x = $20.994

The price per unit is $20.99 and the answer is letter "D".