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Snappy Gifts wants a net profit of $32,400 on its new glitter gift bag. The fixed costs for producing the bag are $184,000 while the variable cost per unit is $1.20. If the estimated unit sales are 395,000 units, what selling price per unit should Snappy try? (Round to the nearest cent.)

Respuesta :

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Let x be the selling price of the bag. The revenue that the company will get from the sales of the bag is equal to 
                                     revenue = 395000x
The total cost is equal to the sum of the fixed and variable cost which can be expressed as,
                                                 184000 + (1.20)(395,000)
The net profit is calculated by subtracting the cost from the revenue. That is,
                                        32,400 = 395000x - (184000 + 474000)
 The value of x is equal to $1.748. 

Answer:

Selling price = $1.75 per unit

Step-by-step explanation:

Let x is the selling price of one gift bag.

So selling price of 395000 units will be = $39500x

Since fixed costs for producing the bag are $184000 and variable cost per unit is = $1.20

Therefore, variable cost of 395000 units will be = $1.20×395000

                                                                                = $474000

Now the cost price of 395000 units will be = Fixed cost + variable cost

                                                                       = 184000 + 474000

                                                                       = $658000

Now we know profit = Selling price - cost price

                      32400 = 395000x - 658000

                  395000x = 32400 + 658000

                  395000x = 690400

                               x = [tex]\frac{690400}{395000}[/tex]

                               x = $1.75

Therefore. $1.75 per unit will be the selling price of glitter gift bags.

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