Eastern Semiconductor is currently selling its most popular microchip for $220. has been selling 4.000 of these chips per month . The company has learned however , that next month an overseas competitor will enter the market and start selling a copy of this chip for $200. If Eastern maintains its price of $220 per chip expects its sales to decrease to 3,000 units per month. Given that Eastern's variable costs for this product are $40 per chip, what is the breakeven sales level for Eastern decreasing its price by $20 price per chip?

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26-02-2022
Business

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Eastern Semiconductor is currently selling its most popular microchip for $220. has been selling 4.000 of these chips per month . The company has learned however , that next month an overseas competitor will enter the market and start selling a copy of this chip for $200. If Eastern maintains its price of $220 per chip expects its sales to decrease to 3,000 units per month. Given that Eastern's variable costs for this product are $40 per chip, what is the breakeven sales level for Eastern decreasing its price by $20 price per chip?

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Parrain Parrain · Answer 1 · 2022-02-28T14:24:05+01:00

Based on the price change, the decrease in sales, and the variable cost, the breakeven sales level for Eastern Semiconductor would be 375 units.

What would be the breakeven point here?

The breakeven point can be found by the formula:

= [Change in fixed price - (Change in selling price x decrease in sales)] / [New selling price - Variable cost]

Change in selling price is:

= New selling price - Original selling price

= 200 - 220

= -$20

Solving gives:

= [ 0 - ( -20 x 3,000)] / [200 - 40)

= 375 units

Find out more on breakeven quantities at https://brainly.com/question/21137380.