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A mid-sized manufacturer of pens, Montvert, learned about your competencies in cost management and management control. Montvert manufactures and sells pens. In Year N, sales

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A mid-sized manufacturer of pens, Montvert, learned about your competencies in cost management and management control. Montvert manufactures and sells pens. In Year N, sales turnover was 20 millions euros. Given the high-quality of its products, Montvert is able to sell its pens at 2 per unit. Montvert's owner and director general asks you for your help in further analyzing the economic situation of the firm: 1. What is the present operating profit? The break-even point in sales? In revenues? 2. Calculate the new operating profit for each of the following changes: a. An increase in raw material cost will increase by 0.16 the unit variable cost. b. An advertising campaign would increase fixed costs by 360,000 but could also increase sales by 10 percent. c. A promotional sale (a 20 percent discount on the usual selling price) could increase sales output by 40 percent and decrease variable costs by 10 percent. d. A higher-end positioning of the product would allow raising sales prices by 10 percent yet would equally increase fixed costs by about 80,000. To help you in your analysis, she provides you with some additional information on the cost situation: according to her records, annual fixed costs amount 3,600,000 and variable costs per unit are 1.20

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