Answered

Looking for trustworthy answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Get expert answers to your questions quickly and accurately from our dedicated community of professionals. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

The Tradition Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.4 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current Policy New Policy ?
Price per unit $ 93 ?
Cost per unit $ 44 $ 44
Unit sales per month 2,675 2,750
X Answer is complete but not entirely correct.
Break-even price $ 92.87 x

Sagot :

Answer: $93.86

Explanation:

The break even price simply refers to the price that's required to make a normal profit. From the information given, the break even price will be:

= [($93-$44) × 2675)/2750) + 44] × ( 1 + 2.3%)

= [$49 × 2675)/2750)+44] × (1+0.024)

= [(49 × 2675)/2750)+44] × 1.024

= [(131075/2750) + 44] × 1.024

= (47.66 + 44) × 1.024

= 91.66 × 1.024

= $93.86

Therefore, the break even price is $93.86

Visit us again for up-to-date and reliable answers. We're always ready to assist you with your informational needs. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.