Edison Resources Inc., a new division of a major power supply company, recently patented a new battery that uses zinc-air technology. The unit costs for the new battery are the following: the battery housing is $25 per unit, materials are $9 per unit, and direct labor is $17 per unit.

Edison Resources Inc., a new division of a major power supply company, recently patented a new battery that uses zinc-air technology. The unit costs for the new battery are the following: the battery housing is $25 per unit, materials are $9 per unit, and direct labor is $17 per unit. The annual fixed costs associated with the new battery include: sales, marketing, and advertising expenses of $2 million; general and administrative expenses of $1.5 million; and production costs of $1 million. Answer the following questions and show your calculations. a) What is the total per-unit variable cost associated with the new battery? b) What are the total fixed costs for the new battery? c) If the price for the new battery was set at $67, what would the break-even point be? 2. Below is a demand table of the McDonald’s new vegan combination menu item (vegetable wrap, sweet potato fries, and water). Based on this information, answer the following questions and show your work.

a) If McDonald’s pricing objective is to maximize profits, what price should they charge for the new combo item? b) If McDonald’s pricing objective is to reach a target return (ROI) of 20%, what price should they charge for the new combo item? Note: ROI = Total Revenue−Total Cost Total Cost c) What is the price elasticity of demand between $5 and $6 for the new combo item? d) Is the demand for McDonald’s new combo item elastic or inelastic? What are the implications?

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