Maker Sun Chairs is trying to determine the optimal price to charge for its galvanized deck chairs.The company has total fixed costs of $120,000 and the deck chairs have a unit variable cost of $27.00 per unit.Maker Sun Chairs has determined that the following relationships exist between price and demand: $$\begin{array} { c c }
\text { Unit Price } & \text { Unit Dem and } \
\$ 45 & 7,200 \
\$ 44 & 7,800 \
\$ 43 & 8,400 \
\$ 42 & 8,800
\end{array}$$ What is the anticipated revenue at a price of $44?
A)$343,200
B)$132,600
C)$12,600
D)$387,200

Question

Maker Sun Chairs is trying to determine the optimal price to charge for its galvanized deck chairs.The company has total fixed costs of $120,000 and the deck chairs have a unit variable cost of $27.00 per unit.Maker Sun Chairs has determined that the following relationships exist between price and demand: $$\begin{array} { c c } 
\text { Unit Price } & \text { Unit Dem and } \
\$ 45 & 7,200 \
\$ 44 & 7,800 \
\$ 43 & 8,400 \
\$ 42 & 8,800
\end{array}$$ What is the anticipated revenue at a price of $44?
A)$343,200
B)$132,600
C)$12,600
D)$387,200

Quizplus · Accepted Answer

The anticipated revenue at a price of $44 is calculated by multiplying the unit price by the unit demand at that price point. So, at a price of $44, the revenue is $44 * 7,800 = $343,200.