Question: 1. Assume that TexCo is a widget manufacturer. It costs TexCo $62 (parts and labor) to manufacture each unit, and it incurs fixed overhead of $2.5 million per year. If TexCo prices the widgets using a 40% markup on cost, how many widgets must it sell annually in order to break even? Show your work?
2. Based on your answer to #1, if TexCo actually sells 150,000 units this year, what will its net profit be? Show your work.
3. Flip's Flops, a small retailer located in South Padre Island, purchases "Sea Turtle" brand flip flops at a cost of $12 per pair. If the manager prices the flip flops using a 60% "markup on price", what is the selling price to consumers?
4. Assume that it is nearing the end of the summer, and the Flip's Flops still has a large number of "Sea Turtle" flip flops in the store. If the manager marks the price of the flip flops down by 40%, what is the new selling price of this item?
5. Peaks is a snowboard manufacturer, and is working on a new, high-end board to sell to retail stores. These boards will have a suggested retail price of $749. If Peaks knows that these retailers price their boards using a 50% "markup on retail", and Peaks wants to be able to achieve a 60% "markup on cost", what is the most that it can spend, per unit, to produce this board?÷≥