SRB Corporation manufactures and sells espresso machines for $80 each. In a recent accounting period, SRB incurred the following costs to produce 5,000 espresso machines:
Direct material $ 18,250
Direct labour 36,250
Variable manufacturing overhead 22,250
Fixed manufacturing overhead 19,000
Variable nonmanufacturing costs 19,750
Fixed nonmanufacturing costs 21,000
Total $136,500
Assume that SRB plans to increase the price of its current espresso machines by 30% next year, with a resultant 40% drop in unit sales. Use the appropriate natural logarithms below to calculate the indicated amounts:
ln (0.1)= -2.303 ln (0.6)= -0.511 ln (1.1)= 0.095
ln (0.3)= -1.204 ln (0.7)= -0.357 ln (1.3)= 0.262
a)Price elasticity of demand
b)Profit maximizing price
c)Total cost per unit to achieve a 30% profit margin

Question

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The Answer of SRB Corporation manufactures and sells espresso machines for $80 each. In a recent accounting period, SRB incurred the following costs to produce 5,000 espresso machines:
Direct material $ 18,250
Direct labour 36,250
Variable manufacturing overhead 22,250
Fixed manufacturing overhead 19,000
Variable nonmanufacturing costs 19,750
Fixed nonmanufacturing costs 21,000
Total $136,500
Assume that SRB plans to increase the price of its current espresso machines by 30% next year, with a resultant 40% drop in unit sales. Use the appropriate natural logarithms below to calculate the indicated amounts:
ln (0.1)= -2.303 ln (0.6)= -0.511 ln (1.1)= 0.095
ln (0.3)= -1.204 ln (0.7)= -0.357 ln (1.3)= 0.262
a)Price elasticity of demand
b)Profit maximizing price
c)Total cost per unit to achieve a 30% profit margin

SRB Corporation Manufactures and Sells Espresso Machines for $80 Each