Acme Shoe Co. sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per kit. Acme would like to earn a profit of $2 million. How many kits must Acme sell at a price of $15?

Question

Quizplus · Accepted Answer

To find the number of kits needed to achieve a $2 million profit, use the formula: (Fixed Costs + Desired Profit) / (Selling Price per Unit - Variable Cost per Unit). Here, it is ($6,000,000 + $2,000,000) / ($15 - $5) = 800,000 kits.