Asked by Ruben Martinez on Jul 21, 2024
Verified
At what selling price would the new product be just breaking even?
A) $246 per unit
B) $250 per unit
C) $232 per unit
D) $282 per unit
Breaking Even
Refers to the point at which total revenues equal total costs or expenses, resulting in no profit or loss for a business.
Selling Price
The amount for which a product is sold to the customer, determining the revenue generated from sales.
- Scrutinize the financial outcomes stemming from the introduction of a new commodity or the acceptance of a tailored order.
Verified Answer
MZ
minghan zhangJul 22, 2024
Final Answer :
B
Explanation : 
The selling price would have to cover all of the costs of $625,000.On a per unit basis, the cost is $250 per unit (= $625,000 ÷ 2,500 units).
Reference: CH11-Ref6
The Draper Corporation is considering dropping its Doombug toy due to continuing losses.Data on the toy for the past year follow:
If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs.The remainder of the fixed costs are not avoidable.
The selling price would have to cover all of the costs of $625,000.On a per unit basis, the cost is $250 per unit (= $625,000 ÷ 2,500 units).Reference: CH11-Ref6
The Draper Corporation is considering dropping its Doombug toy due to continuing losses.Data on the toy for the past year follow:
If the toy were discontinued, Draper could avoid $8,000 per year in fixed costs.The remainder of the fixed costs are not avoidable.
Learning Objectives
- Scrutinize the financial outcomes stemming from the introduction of a new commodity or the acceptance of a tailored order.
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