- 4 Marks
MA – May 2020 – L2 – Q5c – Decision making techniques
Determine the optimal selling price for a new product by analyzing cost and revenue data.
Question
Blasius Ltd has just decided to produce a new line of item, namely bed, that can be sold in its retail shops throughout the country. It has provided you with the following information concerning the total cost of annual production and the prices at which that production could be sold:
| Annual production units | Total cost (GH¢000) | Selling price (per unit) (GH¢) |
|---|---|---|
| 2,500 | 100.3 | 70.8 |
| 5,000 | 186.3 | 66.7 |
| 7,500 | 287.8 | 62.5 |
| 10,000 | 405.0 | 58.3 |
| 12,500 | 537.8 | 54.2 |
Required:
Determine the optimal selling price for the bed. (4 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Cost Analysis, Decision Making, Optimal Pricing, Profit Maximization
- Level: Level 2
- Topic: Decision making techniques
- Series: MAY 2020
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