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Minden Company introduced a new product last year for which it is trying to find...

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Accounting

Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies suggest that the company can increase sales by 5,400 units for each $2 reduction in the selling price. The companys present selling price is $66 per unit, and variable expenses are $38 per unit. Fixed expenses are $600,000 per year. The present annual sales volume (at the $66 selling price) is 20,000 units.

Required:

1. What is the present yearly operating income or loss?

2. What is the present break-even point in unit sales and in dollar sales? (Round intermediate calculations and final answers to the nearest whole number.)

3. Assuming that the marketing studies are correct, what is the maximum annual profit that the company can earn? At how many units and at what selling price per unit would the company generate this profit?

4-a. What would be the break-even point in unit sales and in dollar sales using the selling price you determined in (3) above (e.g., the selling price at the level of maximum profits)? (Round intermediate calculations and final answers to the nearest whole number.)

4-b. This part of the question is not part of your Connect assignment.

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