Business, 03.04.2020 19:31 carolinasantos2

To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider this case: Roxxon Inc. is considering a project that will have fixed costs of $15,000,000. Its sale price will be $37.50 per unit, and it will have a variable cost per unit of $12.80. Therefore, Roxxon Inc. has to sell units to break even on this project (Qbe). Roxxon Inc/s marketing sales director doesn't think that the market for the firm's goods is big enough to sell enough units to make the company's target operating profit of $15,000,000. In fact, she believes that the firm will be able to sell only about 175,000 units. However, she also thinks the demand for Roxxon Inc.'s product is relatively inelastic, so the firm can increase the sale price. Assuming that the firm can sell 175,000 units, what price must it set to meet the CFO's EBIT goal of $15,000,000? a) $211.86 b) $230.29 c) $193.44 d) $184.23

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To be profitable, a firm must recover its costs. These costs include both its fixed and its variable...

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