Problem:
Bob's company sells one product with a variance cost of $5 per unit. The company is unsure what price to change in order to maximize profits. The price charged will also affect the demand.
Required:
If fixed costs are $100,000 and the following chart represents the demand at various process, what price should be charged in order to maximize profits?
- Units sold Price
- 30,000 $10
- 40,000 $9
- 50,000 $8
- 60,000 $7
Note: Please provide through step by step calculations.