Ace Shoe Company sells heel replacement kits for men's shoes.It has fixed costs of $6 million and unit variable costs of $5 per pair.Ace would like to earn a profit of $2 million; how many pairs must they sell at a price of $15?

Question

Quizplus · Accepted Answer

To calculate the number of pairs that Ace Shoe Company must sell in order to earn a profit of $2 million, we can use the following formula:

Profit = (Unit price * Quantity sold) - (Fixed costs + Unit variable costs * Quantity sold)

Plugging in the given values, we get:

$2 million = ($15 * Quantity sold) - ($6 million + $5 * Quantity sold)
Simplifying the equation, we get:

$2 million = $10 * Quantity sold - $6 million
$8 million = $10 * Quantity sold
Quantity sold = 800,000 kits

Therefore, Ace Shoe Company must sell 800,000 pairs of heel replacement kits at a price of $15 in order to earn a profit of $2 million. Thus, the best choice is D.

Ace Shoe Company Sells Heel Replacement Kits for Men's Shoes