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## Problems

1. See-Clear Optics is considering producing a new line of eyewear. After considering the costs of raw materials and the cost of some new equipment, the company estimates fixed costs to be \$40,000 with a variable cost of \$45 per unit produced.

• (a) If the selling price of each new product is set at \$100, how many units need to be produced and sold to break even? Use both the graphical and algebraic approaches.
• (b) If the selling price of the product is set at \$80 per unit, See-Clear expects to sell 2000 units. What would be the total contribution to profit from this product at this price?
• (c) See-Clear estimates that if it offers the product at the original target price of \$100 per unit, the company will sell about 1500 units. Will the pricing strategy of \$100 per unit or \$80 per unit yield a higher contribution to profit?

2. Med-First is a medical facility that offers outpatient medical services. The facility is considering offering an additional service, mammography screening tests, on-site. The facility estimates the annual fixed cost of the equipment and skills necessary for the service to be \$120,000. Variable costs for each patient processed are estimated at \$35 per patient. If the clinic plans to charge \$55 for each screening test, how many patients must it process a year in order to break even?

3. Tasty Ice Cream is a year-round take-out ice cream restaurant that is considering offering an additional product, hot chocolate. Considering the additional machine it ...

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