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Assume again that Andretti Company has sufficient capacity to produce 120,150 Daks each year. A customer in a foreign market wants to purchase 31,150 Daks. If Andretti accepts this order it would have to pay import duties on the Daks of $3.70 per unit and an additional $18,690 for permits and licenses. The only selling costs that would be associated with the order would be $2.40 per unit shipping cost. What is the break-even price per unit on this order? (Round your answers to 2 decimal places.)

Answer :

hyderali230

Answer:

Break-even price is $6.7 per unit

Explanation:

The break-even point is the level of sales at which the business incur no profit no loss.Fixed and variable costs are covered at this level of sales. Use following formula of break-even to calculate the Break-even sales.

Break-even price = Variable cost per unit + Fixed cost per unit

Break-even price = ( Import duty per unit + Selling cost ) + ( Fixed cost of permit and Licenses /Numbers of unit in order )

Break-even price = ($2.40 + $3.70) + ($18,690/31,150)

Break-even price = $6.1 per unit + $0.6 per unit

Break-even price = $6.7 per unit

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