Sports Equipment Ltd, a Sporting Goods Manufacturer, Has Recently Created

question 2

Multiple Choice

Sports Equipment Ltd, a sporting goods manufacturer, has recently created a new department to produce badminton equipment. In the next period the department will manufacture a single product, an aluminium badminton racquet, which has a unit selling price of $18. The variable costs per unit are $6 and the fixed costs per month are $8 000. The department has the capacity to produce 5 000 units per month. Management would like to use the production facilities at full capacity and also yield a monthly profit of $20 000. Assuming demand can be increased by reducing the selling price, calculate the minimum unit price at which both these objectives can be achieved.

• A) $10.00
• B) $11.60
• C) $12.00
• D) $18.00

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Definitions:

Economic Development

The process by which a nation improves the economic, political, and social well-being of its people, often measured by increases in per capita income and quality of life.

Reconstruction

The period following the Civil War (1865-1877) during which the United States attempted to address the issues arising from the readmission to the Union of the 11 states that had seceded.

Northern Investors

Businesspersons or companies from the northern United States who invested capital, especially in the development of the southern states and various industries.

Plessy V. Ferguson

A landmark 1896 U.S. Supreme Court decision that upheld the constitutionality of racial segregation under the "separate but equal" doctrine.