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:

Lacunae

Small cavities in bone or cartilage tissue that house osteocytes or chondrocytes, respectively, essential for tissue health and maintenance.

Canaliculi

Small, channel-like structures in bone tissue that allow for the distribution of nutrients and communication among osteocytes.

Periosteum

The bones are wrapped in a heavy connective tissue layer, filled with blood vessels, except at joint areas.

Trabeculae

The network of irregularly shaped bony plates or struts within spongy bone, helping to distribute stress and support weight.