Question - Greentown Industries sells its transport services at a range of prices to five different customer groups. The company has fixed costs of £150,000 per year. The average variable costs for each transport service, irrespective of customer group, is £7. The Table below shows the prices charged to each customer group and the quantity of transport services that are currently sold at that price.
|
Customer group
|
Selling price
|
Quantity
|
|
Multinational
|
£19
|
13,000
|
|
Corporate
|
£20
|
12,500
|
|
Small business
|
£21
|
12,000
|
|
Government
|
£22
|
11,000
|
|
Private
|
£23
|
10,000
|
If the average selling price is £21, calculate the breakeven point in quantity and money terms and ignoring any market demand or capacity limitations, calculate the optimum selling price for Greentown Industries and identify which customer group is most profitable.