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The current monthly production volume of a company is 1,120 units. Workers are paid $19 per hour, and each worker can produce 4 units per hour. The fixed costs for a month are $4,200. Determine the selling price of the product that the company should charge in order to breakeven its monthly profit.

Respuesta :

Answer:

The selling price of the product that the company should charge in order to breakeven its monthly profit is $8.50 per unit.

Explanation:

Number of hours worked by workers per month = Total monthly units / Units per hour = 1,120 / 4 = 280

Total monthly variable cost = Total monthly wages = Number of hours worked by workers per month * Hourly rate = 280 * $19 = $5,320

Total monthly cost = Total monthly variable cost + Fixed costs for a month = $5,320 + $4,200 = $9,520

Selling price to breakeven = Total monthly cost / Total monthly units = $9,520 / 1,120 = $8.50

Therefore, the selling price of the product that the company should charge in order to breakeven its monthly profit is $8.50 per unit.

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