A manufacturing company that produces one single type of a product has a total fixed...
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A manufacturing company that produces one single type of a product has a total fixed cost of $5.000.000, a unit variable cost of $120, and a unit selling price of $200. The current operating profit level of the company is $3.000.000. The company hasa fixed number of working force and the new contract with employees requires an additional $1.600.000 cost burden for the company. Now, the top management thinks to increase the products selling price in order to compensate the burden. The product of the company has a price elasticity which is equal to one. Given this situation, at least how much percentage of selling price increase should be made in order to generate the same level of profit ?
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