question 4 (multiple choice worth 4 points)
(business costs lc)

zion sun chairs manufactures 3,575 beach chairs each month. determine the minimum sales price zion sun chairs must sell each chair for to earn a monthly profit of $55,000, if the total monthly fixed costs are $17,363.50 and the variable cost per chair is $52.17.

$72.41
$70.80
$25.38
$20.24

Question

question 4 (multiple choice worth 4 points)
(business costs lc)

zion sun chairs manufactures 3,575 beach chairs each month. determine the minimum sales price zion sun chairs must sell each chair for to earn a monthly profit of $55,000, if the total monthly fixed costs are $17,363.50 and the variable cost per chair is $52.17.

$72.41
$70.80
$25.38
$20.24

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "quick" ], "needs_drawing": false, "concepts_used": [ "Cost-Volume-Profit Analysis", "Break-Even Pricing" ], "new_concepts": [], "current_concepts": [ "Cost-Volume-Profit Analysis", "Break-Even Pricing", "Target Profit Pricing" ] } ## Identify given values and target variable $$ \begin{aligned} &Q = 3,575 \quad \text{(Quantity of chairs)} \ &\pi = \$55,000 \quad \text{(Target monthly profit)} \ &FC = \$17,363.50 \quad \text{(Total monthly fixed costs)} \ &VC = \$52.17 \quad \text{(Variable cost per chair)} \ &P = \text{Target sales price per chair} \end{aligned} $$ ## Set up the profit equation $$ \begin{aligned} &\pi = (P - VC) \cdot Q - FC \ &55,000 = (P - 52.17) \cdot 3,575 - 17,363.50 \end{aligned} $$ ## Solve for the minimum sales price $$ \begin{aligned} &55,000 + 17,363.50 = 3,575 \cdot (P - 52.17) \ &72,363.50 = 3,575 \cdot (P - 52.17) \ &P - 52.17 = \frac{72,363.50}{3,575} \ &P - 52.17 = 20.241538 \ &P = 20.241538 + 52.17 \ &P \approx 72.41 \end{aligned} $$

(A) $72.41

(B) $70.80

(C) $25.38

(D) $20.24

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Accounting", "Cost-Volume-Profit Analysis" ] }

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QUESTION IMAGE

Question

Explanation:

Identify given values and target variable

Set up the profit equation

Solve for the minimum sales price

Answer: