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Suppose you work for a company that makes a product line for a large hardware chain. The chain asks you for a price quote for 30,000 units that will require a $1,500,000 investment with marginal costs of $15 per unit. What is the lowest price you are willing to quote

Respuesta :

Answer:

$1,950,000

Explanation:

Note the company has a margin per unit cost and investment cost, where

investment cost =  $1,500,000

+

margin per unit cost =  $450,000 (30,000 x $15)

Thus, total cost = $1,950,000. Since companies do not want to make loses, but may allow for break-even, the lowest price to quote  should not be lesser than the total cost of $1,950,000.