Lilly LLC wants to make a profit of $30,000.It has variable costs of $99 per unit and fixed costs of $20,000.How much must it charge per unit if 5,000 units are sold?
A)$84
B)$69
C)$99
D)$109

Question

Quizplus · Accepted Answer

To achieve a profit of $30,000 with fixed costs of $20,000 and selling 5,000 units, Lilly LLC needs total revenue of $50,000 (profit + fixed costs) in addition to covering variable costs. The variable cost per unit is $99, so the total variable cost for 5,000 units is $495,000. The total required revenue is $545,000 ($495,000 for variable costs + $50,000 for fixed costs and profit). Dividing this by 5,000 units gives a price per unit of $109.

Lilly LLC Wants to Make a Profit of $30,000