Magnum Beverages sells bottles of premium champagne. It currently costs $40 per bottle to produce each bottle of champagne. Magnum has overhead costs of $1,800 per month, and expects to incur this amount each month. Magnum produced and sold 100 bottles of champagne last month and expects to continue this production and sales pattern for the rest of this current year. Its closest competitor currently sells its bottles of champagne at $65 per bottle. What is the lowest price that Magnum could sell each bottle of champagne for and to make a monthly operating profit?
A) $55.01
B) $58.01
C) $65.00
D) $68.00

Question

Quizplus · Accepted Answer

Total Revenues - Total Costs = Operating Profit (Loss); (100 x $58.01) - (100 x $40) - $1,800 = $5,801 - $4,000 - $1,800 = $1 Operating Profit

Magnum Beverages Sells Bottles of Premium Champagne