AAA Farming can sell 10 000 units of a product for which the variable expenses are $3 per unit.Fixed expenses are $20 000 and the farmer wishes to earn a profit of $20 000.What price must AAA charge?

Question

Quizplus · Accepted Answer

First, we need to calculate the total cost:
Total cost = Variable expenses + Fixed expenses + Desired profit
Total cost = ($3 per unit x 10 000 units) + $20 000 + $20 000
Total cost = $30 000 + $20 000 + $20 000
Total cost = $70 000

Then, we can calculate the price per unit needed to achieve this total cost:
Price per unit = Total cost / Number of units
Price per unit = $70 000 / 10 000 units
Price per unit = $7 per unit

Therefore, AAA Farming must charge $7 per unit to sell 10 000 units of the product and earn a profit of $20 000.

AAA Farming Can Sell 10 000 Units of a Product