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Amazing Umbrellas was founded 3 years ago and focuses on manufacturing colorful umbrellas. Getting started has been a struggle. For the 3rd year in a
Amazing Umbrellas was founded 3 years ago and focuses on manufacturing colorful umbrellas. Getting started has been a struggle. For the 3rd year in a row, it appears that Amazing Umbrellas will fail to sell enough units to break even. Their sales price per unit is $10, and the contribution margin per unit is $4. Total fixed cost is $40,000. Sales for year 3 are currently projected to be 8,000 units. Then a major retailer called and offered to buy 25,000 units at $6.50 per unit. What a great opportunity or is it? Imagine you are advising the founder and president of Amazing Umbrellas on what decision to make
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