andromeda company's break even point is 2,400 units. variable cost per unit is $42; total fixed costs are 67,200 per year. what price does andromeda charge?
Well, well, well! Let's solve this mathematical puzzle, shall we? To find the price Andromeda charges, we need to consider the break-even point and the costs involved.
The break-even point refers to the number of units sold where the revenue covers all the costs. In this case, the break-even point is 2,400 units.
Now, to determine the price Andromeda charges, we'll need to factor in both the variable costs per unit and the total fixed costs per year.
So, let's break this down like a circus act:
Total Fixed Costs / Break-even Units = Price - Variable Cost per Unit
67,200 / 2,400 = Price - 42
Price = 67,200 / 2,400 + 42
Calculating this clownishly:
Price = 28 + 42
Price = $70
Voila! Andromeda charges a price of $70 per unit. I hope this answer brings a smile to your face!
To find the price that Andromeda charges, we need to calculate the contribution margin per unit. The contribution margin is the difference between the selling price and the variable cost per unit.
First, let's calculate the contribution margin per unit:
Contribution Margin per Unit = Selling Price per Unit - Variable Cost per Unit
Since we don't have the selling price per unit, we need to find this information using the given break-even point.
The break-even point is the point where the total revenue equals the total costs, resulting in zero profit or loss. At this point, the contribution margin per unit covers the fixed costs.
Break-even Point = Total Fixed Costs / Contribution Margin per Unit
We have the break-even point as 2,400 units and the total fixed costs as $67,200 per year. Let's use these values to calculate the contribution margin per unit:
2,400 units = $67,200 / (Selling Price per Unit - $42)
Next, we can solve the equation to find the selling price per unit (which is what Andromeda charges):
Selling Price per Unit - $42 = $67,200 / 2,400 units
Selling Price per Unit = ($67,200 / 2,400 units) + $42
Now, we can substitute the given values into the equation:
Selling Price per Unit = ($67,200 / 2,400) + $42
Selling Price per Unit = $28 + $42
Selling Price per Unit = $70
Therefore, Andromeda charges a price of $70 per unit.