A Small Business Owner Is Contemplating the Addition of Another

question 26

Essay

A small business owner is contemplating the addition of another product line.Capacity increases and equipment will result in an increase in annual fixed costs of $50,000.Variable costs will be $25 per unit.
(i)What unit selling price must the owner obtain to break-even on a volume of 2,500 units a year?
(ii)Because of market conditions,the owner feels a revenue of $47 is preferred to the value determined in part a.What volume of output will be required to achieve a profit of $16,000 using this revenue?

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Definitions:

Divergent

Thinking or a thought process that generates creative ideas by exploring many possible solutions, contrasting with convergent thinking.

Subgoals

Intermediate objectives set as part of a strategy to achieve a larger goal, helping to organize efforts and measure progress.

Working Backwards

Working backwards is a problem-solving strategy that involves starting with the conclusion or desired outcome and then deducing the steps needed to reach that outcome.

Applied Geology

Applied geology is the practical application of geological principles and techniques to solve problems in everyday life, including engineering, environmental assessments, and natural resource management.