DXZ,IncCurrently Produces One Product Which Sells for $250 Per Unit

question 92

Essay

DXZ,Inc.currently produces one product which sells for $250 per unit.The company's fixed costs are $75,000 per year; variable costs are $205 per unit.A salesman has offered to sell the company a new piece of equipment which will increase fixed costs to $100,000.The salesman claims that the company's break-even point will not be altered if the company purchases this equipment.What will be the company's new variable cost per unit?

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Definitions:

Sales Manager

A person who directs an organization's sales team, oversees its operations, and strives to achieve sales targets.

Order-taker

An individual whose primary job responsibility is to take customer orders in a retail or B2B setting, often without the requirement to upsell.

CRM System

A set of information technology tools used to help companies stay connected to customers and prospects, streamline processes, and improve profitability.

CLV System

Customer Lifetime Value system, a metric that estimates the total revenue a business can expect from a single customer account throughout the business relationship.