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Choco Delite is a manufacturer of fine chocolates. It’s monthly rental expense is $1,000,000. It has 2 million in fixed labor costs. Its marginal costs are $.70 per chocolate bar. If sales fall by 30 percent from 2 million chocolate bars per month to 1,400,000 chocolate bars per month, what happens to the AFC per chocolate bar? The MC per chocolate bar? what about the minimum amount that can be charged to break even on these costs?
Choco Delite is a manufacturer of fine chocolates. It’s monthly rental expense is $1,000,000. It has 2 million in fixed labor costs. Its marginal costs are $.70 per chocolate bar. If sales fall by 30 percent from 2 million chocolate bars per month to 1,400,000 chocolate bars per month, what happens to the AFC per chocolate bar? The MC per chocolate bar? what about the minimum amount that can be charged to break even on these costs?
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