Q1) Crede Company sells single product which has variable costs of $10 per unit. Fixed costs will be $700,000 across all levels of sales shown.
|
Units Sold
|
Price per unit
|
|
80,000
|
$35
|
|
90,000
|
$33
|
|
100,000
|
$31
|
|
110,000
|
$30
|
|
120,000
|
$28
|
i) What price must Crede charge to maximize profits?
A) $28
B) $30
C) $35
D) $31
E) $33
ii) What price would Crede charge to maximize revenues?
A) $30
B) $31
C) $35
D) $28
E) $33
iii) What, if any information given was not applicable to profit maximization decision?
A) The variable costs per unit
B) The quantities demanded
C) All of the information was relevant
D) The selling prices
E) The total fixed costs