The Auto Company has a small plant that produces speedometers exclusively. Its annual fixed costs are $30,000, and its variable costs are $10 per unit. It can sell a speedometer for $25.
a. How many speedometers must the company sell to break even?
b. What is the break-even revenue?
c. The company sold 3,000 units last year. What was its profit?
d. Next year's fixed costs are expected to rise to $37,500. What will be the break-even quantity?
e. If the company will sell the number of units obtained in part d and wants to maintain the same profit as last year, what will its new price have to be?