Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 1

A design-to-cost approach to product pricing involves determining the selling price of the product and then figuring out if it can be made at a cost lower than that. Banner Engineering's QT50R radar-based sensor features frequency-modulated technology to accurately monitor or detect objects up to 15 miles away while resisting rain, wind, humidity, and extreme temperatures. It has a list price of $589, and the variable cost of manufacturing the unit is $340.
a) What could the company's fixed cost per year be in order for Banner to break even with sales of 9000 units per year
b) If Banner's fixed cost is actually $750,000 per year, what is the profit at a sales level of 7000 units per year