After researching the market, Mr. Jamail concludes that the $350 per set selling

Question

After researching the market, Mr. Jamail concludes that the $350 per set selling price is too high. Customers will likely pay only $310 per set. Mr. Jamail believes he can obtain a cost reduction from his supplier of $20 per set (variable cost drops from $210 per set to $190 per set) and still provide the level of quality required to achieve a sales volume of 75 sets. Under these circumstances, what amount of fixed costs can Mr. Jamail incur and still obtain the target profit of $4,900?

Selling price per unit
Variable Expenses per unit
Sales volume in units
Profit Sales = VC + FC + Profit Selling Price * VC * per unit # of units ) = ( per unit # of units ) + FC + Profit * ) = ( * ) + X + = + X + = X

Explanation / Answer

Desired profit = $4900

S.P. = $310

Variable cost = $190

Volume = 75

Profit = S.P. - ( fixed cost + Variable cost)

4900 = 310*75 - F.C - 190*75

F.C = $4100

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