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January 11th, 2017, 04:34 AM  #1 
Newbie Joined: Jan 2017 From: Australia Posts: 1 Thanks: 0  accounting algebra Q
Hey there: Can someone please advise on how to solve this? Compay has fixed costs of \$400,000 and variable costs are 75% of the selling price. To realise profits of \$100,000 from sales of 500,000 units, the selling price per unit must be? Fixed Costs + 0.75SalePrice(500 000) = 500 000Sale Price – \$100 000 \$400 000 + 0.75SP(500 000) = 500 000SP  \$100 000 Thanks so much y'all. Last edited by skipjack; January 11th, 2017 at 09:11 AM. 
January 11th, 2017, 06:57 AM  #2  
Senior Member Joined: May 2016 From: USA Posts: 998 Thanks: 410  Quote:
Second, you will save time and avoid errors by ALWAYS STARTING with writing down a SINGLE letter as an abbreviation for EACH relevant variable or unknown. This is a basic idea in algebra that for some reason or other is often NOT taught in schools and frequently ignored in accounting and economics. $s = sales\ price.$ $v = variable\ costs.$ $f = fixed\ costs.$ $p = profits.$ $u = units\ sold.$ Third, write down piece by piece using your letters what you know in this problem. $p = su  (f + vu).$ Always start with general information. $u = 500\ thousand \implies p = 500s  (f + 500v).$ Use thousands to simplify. $f = 400\ thousand \implies p = 500s  (400 + 500v).$ $p = 100\ thousand \implies 100 = 500s  (400 + 500v).$ $v = 0.75s \implies 100 = 500s  (400  500 * 0.75s) \implies 100 = 500s  400  375s.$ Now finish it up. If you follow this step by step approach, you will find word problems much easier. Last edited by skipjack; January 11th, 2017 at 09:12 AM.  

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