Answer: Price is $7 when sale is 5000 and $6 when sale is 7,500 units.
Explanation:
[tex]Total cost of George = Fixed cost + Variable Cost
= $15,000 + $4 (Units produced)
= $15,000 + $4(5000)
$15,000 + $20,000
= $35,000[/tex]
George will breakeven when his price is just sufficient to cost the total cost.
[tex]Break even = Profit = 0
Total revenue - Total cost = 0
P*Q - $35,000 = 0
P*5000 = $35000
P= $35,000/5000
P=$7[/tex]
If George sells 50% more, then his sales is 7,500 units.
[tex]Total cost of George = Fixed cost + Variable Cost
= $15,000 + $4 (Units produced)
= $15,000 + $4(7,500)
$15,000 + $30,000
= $45,000[/tex]
George will breakeven when his price is just sufficient to cost the total cost.
[tex]Break even = Profit = 0
Total revenue - Total cost = 0
P*Q - $45,000 = 0
P*7500 = $45000
P= $45,000/7,500
P=$6[/tex]
When sales is 5000 units price is $7. When sales is 7,500 units price is $6.
