Blaster Radio Company is trying to decide whether or not to introduce a new model. If they introduce it, there will be additional fixed costs of $400,000 per year. The variable costs have been estimated to be $20 per radio.
a) If Blaster sells the new radio model for $30 per radio, how many must they sell to break even?
b) If Blaster sells 70,000 of the new radio model at the $30 price, what will the contribution to profit be?

Question

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The Answer of Blaster Radio Company is trying to decide whether or not to introduce a new model. If they introduce it, there will be additional fixed costs of $400,000 per year. The variable costs have been estimated to be $20 per radio.
a) If Blaster sells the new radio model for $30 per radio, how many must they sell to break even?
b) If Blaster sells 70,000 of the new radio model at the $30 price, what will the contribution to profit be?

Blaster Radio Company Is Trying to Decide Whether or Not