he Automotive Supply Company produces speedometers. 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 level of output?
e. If the company will sell the number of units obtained in part d, and wants to maintain the same level of profit as last year, what will its new price have to be?