A producer of felt tip pens have received a forecast of demand of 30,000 pens for the coming month

QUESTION:

A producer of felt- tip pens have received a forecast of demand of 30,000 pens for the coming month from its marketing department. Fixed costs of $ 25,000 per month are allocated to the felt- tip operation, and variable costs are 37 cents per pen.

(a) Find the break-even quantity if pens sell for $ 1 each.

(b) At what price must pens be sold to obtain a monthly profit of $ 15,000, assuming that estimated demand materializes?


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