a basket manufacturing company produces 83,575 woven baskets each year. determine the minimum sales price the company must sell each basket for to make a profit of $100,000, if the total annual fixed costs are $817,363.50 and the variable cost per basket is $12.17.

$10.98
$21.95
$23.15
$31.76

Question

a basket manufacturing company produces 83,575 woven baskets each year. determine the minimum sales price the company must sell each basket for to make a profit of $100,000, if the total annual fixed costs are $817,363.50 and the variable cost per basket is $12.17.

$10.98
$21.95
$23.15
$31.76

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "quick" ], "needs_drawing": false, "concepts_used": [ "Break-Even and Profit Pricing" ], "new_concepts": [], "current_concepts": [ "Break-Even and Profit Pricing", "Cost-Volume-Profit Analysis" ] } ## Set up the profit equation $$ \begin{aligned} &Q = 83,575 \ &\text{Profit} = \$100,000 \ &F = \$817,353.50 \ &V = \$12.17 \ &\text{Profit} = (P - V) \cdot Q - F \end{aligned} $$ ## Solve for the minimum sales price $P$ $$ \begin{aligned} &100,000 = (P - 12.17) \cdot 83,575 - 817,353.50 \ &917,353.50 = 83,575 \cdot (P - 12.17) \ &P - 12.17 = \frac{917,353.50}{83,575} \ &P - 12.17 \approx 10.9764 \ &P \approx 23.1464 \approx 23.15 \end{aligned} $$

(A) $10.98

(B) $21.95

(C) $23.15

(D) $31.76

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Cost-Volume-Profit Analysis", "Break-Even and Profit Pricing" ] }

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QUESTION IMAGE

Question

Explanation:

Set up the profit equation

Solve for the minimum sales price \(P\)

Answer: