Assume that your R D team has a new design for their product Able next round that can reduce their material cost of producing units from $8 59 to $7 73 They pass on half of all cost savings by cutting the current price to customers For simplicity Use current labor cost of $8 37 Assume all period costs as reported on Andrews Income Statement for Asia Pacific (Annual Report Page 5) will remain the same Current price is equivalent to $30 00 Shipping cost to Asia Pacific is $2 50 per unit Determine how many units (000's) of product Able would need to be sold in Asia Pacific alone next round to break even on the product Income Statement Asia Pacific Able NA $0 Acre Total Industry Avg Common 100 NA Sales Variable Costs $11,139$13,367 $24,506 $18,272 $6,219 $7,869 $1,857 25 32 8 0 65 35 Direct Labor $3,109 $3,189 $928 $3,109 $4,680 $928 $0 $8,717 $4,650 $0 Direct Material Shipping Cost Inventory Carry Total Variable Costs Contribution Margin $4,799 $5,736 $1,581 $121 $12,238 $6,035 $7,227 $3,912 $15,944 $8,562 Period Costs Depreciation SG A $0 $0 S0 $0 0 R D $0 $1,750 $2,100 $217 $ 4,067 ($155) $0 $1,875 $2,400 $261 $4,536 $1,499 0 14 19 $1,750 $2,500 $261 $4,511 $139 Promotions $0 $0 Sales Admin Total Period Net Margin $3,500 $4,600 $478 $8,578 ($15) 35 0 Other EBIT Interest (Short Long) Taxes Tariffs Profit Sharing Net Profit S0 0 ($15) $1,499 0 0 0 (S4) $375 $23 $1,101 ($12)

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Assume that your R&D team has a new design for their product Able next round that can reduce their material cost of producing units from

Assume that your R&D team has a new design for their product Able next round that can reduce their material cost of producing units from $8.59 to $7.73. They pass on half of all cost savings by cutting the current price to customers. For simplicity:

Use current labor cost of $8.37
Assume all period costs as reported on Andrews Income Statement for Asia Pacific (Annual Report Page 5) will remain the same.
Current price is equivalent to $30.00
Shipping cost to Asia Pacific is $2.50 per unit

Determine how many units (000's) of product Able would need to be sold in Asia Pacific alone next round to break even on the product. image text in transcribed

Income Statement:Asia Pacific Able NA $0 Acre Total Industry Avg. Common 100% NA Sales Variable Costs $11,139$13,367 $24,506 $18,272 $6,219 $7,869 $1,857 25% 32% 8% 0% 65% 35% Direct Labor $3,109 $3,189 $928 $3,109 $4,680 $928 $0 $8,717 $4,650 $0 Direct Material Shipping Cost Inventory Carry Total Variable Costs Contribution Margin $4,799 $5,736 $1,581 $121 $12,238 $6,035 $7,227 $3,912 $15,944 $8,562 Period Costs Depreciation SG&A $0 $0 S0 $0 0% R&D $0 $1,750 $2,100 $217 $%4,067 ($155) $0 $1,875 $2,400 $261 $4,536 $1,499 0% 14% 19% $1,750 $2,500 $261 $4,511 $139 Promotions $0 $0 Sales Admin Total Period Net Margin $3,500 $4,600 $478 $8,578 ($15) 35% 0% Other EBIT Interest (Short & Long) Taxes & Tariffs Profit Sharing Net Profit S0 0% ($15) $1,499 0% 0% 0% (S4) $375 $23 $1,101 ($12)