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Blue Mouse Manufacturers is considering a project that will have fixed costs of $12,000,000. The...

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Finance

Blue Mouse Manufacturers is considering a project that will have fixed costs of $12,000,000. The product will be sold for $37.50 per unit, and will incur a variable cost of $12.80 per unit.

Given Blue Mouses cost structure, it will have to sell 485,830 units to break even on this project (QBEQBE).

Blue Mouse Manufacturerss marketing sales director doesnt think that the market for the firms goods is big enough to sell enough units to make the companys target operating profit of $25,000,000. In fact, she believes that the firm will be able to sell only about 200,000 units. However, she also thinks the demand for Blue Mouse Manufacturerss product is relatively inelastic, so the firm can increase the sale price. Assuming that the firm can sell 200,000 units, what price must it set to meet the CFOs EBIT goal of $25,000,000?

A. $197.80 per unit

B. $227.47 per unit

C. $247.25 per unit

D. $207.69 per unit

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