Spencer Tools would like to offer a special product to its best customers. Howev

Question

Spencer Tools would like to offer a special product to its best customers. However, the firm wants to limit its maximum potential loss on this product to the firm's initial investment in the project. The fixed costs are estimated at $32,000, the depreciation expense is $18,000, and the contribution margin per unit is $12.50. What is the minimum number of units the firm should pre-sell to ensure its potential loss does not exceed the desired level? need to see all work


1,220 units

1,680 units

2,215 units

2,560 units

2,750 units

Explanation / Answer

32,000/12.5 = 2560

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