A Small Business Owner Is Contemplating the Addition of Another

question 60

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.
A) What unit selling price must the owner obtain to break-even on a volume of 2,500 units a year?
B) 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?

• A) What unit selling price must the owner obtain to break-even on a volume of 2,500 units a year?
• B) 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:

Power

The capacity or ability to direct or influence the behavior of others or the course of events.

Flatter Organizational Structure

A management structure with fewer levels of middle management, intended to promote faster decision-making and increased employee involvement.

Superior-Subordinate Relationship

The interaction and power dynamics between individuals in higher positions and those in lower positions within an organizational hierarchy.

Community Power Debate

Refers to discussions and analyses concerning the distribution and exercise of power within communities, including who holds power and how it influences community decisions and dynamics.