Say variable costs are $10 per unit and the sales price is $16 per unit. If volume would triple as a result of decreasing the sales price to $9 per unit, the business should strongly consider decreasing the sales price to $9 per unit.

Question

Quizplus · Accepted Answer

Decreasing the sales price to $9 per unit would result in selling each unit at a loss, since the variable costs alone are $10 per unit, which is higher than the proposed sales price. This means the business would lose money on each unit sold, making it an unfavorable decision.

Say Variable Costs Are $10 Per Unit and the Sales