Question: question 1 abc manufacturing is unsure of the ideal price...
Question 1. ABC Manufacturing is unsure of the ideal price to quote for one of their products, a pump. ABC's president has asked you to do a break even analysis for the pump, and to recommend the optimal price. The fixed costs (FC) associated with manufacturing this particular product are $100,000, and the variable costs (VC) are $50 per unit. ABC's president is considering a selling price (P) for this product of $100. The president wants to know how many units have to be sold in order to break even (BEU).
- Analyze this operations management issue.
- Provide the algebraic equation (using BEU, FC, P, and VC as variables) for the breakeven analysis.
- Calculate and provide the numeric breakeven value.