Danna Martin, president of Mays Electronics, was concerned about the end-of-the year marketing report that she had just received. According to Larry Savage, marketing manager, a price decrease for the coming year was again needed to maintain the company's annual sales volume of integrated circuit boards (CBs). This would make a bad situation worse. The current selling price of $18 per unit was producing a $2-per-unit profit-half the customary $4-per-unit profit. Foreign competitors kept reducing their prices. To match the latest reduction would reduce the price from $18 to $14. This would put the price below the cost to produce and sell it. How could these firms sell for such a low price? Determined to find out if there were problems with the company's operations, Danna decided to hire a consultant to evaluate the way in which the CBs were produced and sold. After two weeks, the consultant had identified the following activities and costs: Activities Costs $125,000 Setting up equipment Materials handling 180,000 Inspecting products 122,000 Engineering support 120,000 Handling customer complaints 100,000 Filing warranties 170,000 Storing goods 80,000 Expediting goods 75,000 Using materials 500,000 Using power 48,000 Manual insertion labor* 250,000 150,000 Other direct labor $1,920,000 Total costs** 3(a) Compute the unit cost required to maintain current market share, while earning a profit of $4 per unit. The unit cost to maintain sales is$ 3(b) Now compute the unit cost required to expand sales by 50%, assuming a per unit profit of $4 The unit cost to expand sales is $ 3(c) How much cost reduction would be required to achieve each unit cost? The cost reduction required to maintain current market sales is$ The cost reduction required to expand market sales is $ 4. Assume that further activity analysis revealed the following: Switching to automated insertion would save $60,000 of engineering support and $90,000 of direct labor. (a) Now what is the total potential cost reduction per unit available from activity analysis? (b) With these additional reductions, can Mays achieve the unit cost to maintain current sales? To increase it by 50%? (c) What form of activity analysis is this: reduction, sharing, elimination, or selection? Round your answers to two decimal places. (a) The unit savings, based on the assumption, is $ (a) Calculate income based on current sales, prices, and costs. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Question not attempted Score: 0/12 Mays Electronics Income Based on Current Pricing 1 Sales 2 Costs 3 Income (b) Calculate the income by using a $14 price (assume that current market share is maintained). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Question not attempted. Score: 0/12 Mays Electronics Income Based on Maintaining Current Market Share 1 Sales 2 Costs Income (c) Calculate the income by using a $12 price, assuming that the maximum cost reduction possible is achieved (including Requirement 4's reduction). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Question not attempted. Score: 0/12 Mays Electronics Income Based on Increasing Market Share 1 Sales 2 Costs 3 Income Danna Martin, president of Mays Electronics, was concerned about the end-of-the year marketing report that she had just received. According to Larry Savage, marketing manager, a price decrease for the coming year was again needed to maintain the company's annual sales volume of integrated circuit boards (CBs). This would make a bad situation worse. The current selling price of $18 per unit was producing a $2-per-unit profit-half the customary $4-per-unit profit. Foreign competitors kept reducing their prices. To match the latest reduction would reduce the price from $18 to $14. This would put the price below the cost to produce and sell it. How could these firms sell for such a low price? Determined to find out if there were problems with the company's operations, Danna decided to hire a consultant to evaluate the way in which the CBs were produced and sold. After two weeks, the consultant had identified the following activities and costs: Activities Costs $125,000 Setting up equipment Materials handling 180,000 Inspecting products 122,000 Engineering support 120,000 Handling customer complaints 100,000 Filing warranties 170,000 Storing goods 80,000 Expediting goods 75,000 Using materials 500,000 Using power 48,000 Manual insertion labor* 250,000 150,000 Other direct labor $1,920,000 Total costs** 3(a) Compute the unit cost required to maintain current market share, while earning a profit of $4 per unit. The unit cost to maintain sales is$ 3(b) Now compute the unit cost required to expand sales by 50%, assuming a per unit profit of $4 The unit cost to expand sales is $ 3(c) How much cost reduction would be required to achieve each unit cost? The cost reduction required to maintain current market sales is$ The cost reduction required to expand market sales is $ 4. Assume that further activity analysis revealed the following: Switching to automated insertion would save $60,000 of engineering support and $90,000 of direct labor. (a) Now what is the total potential cost reduction per unit available from activity analysis? (b) With these additional reductions, can Mays achieve the unit cost to maintain current sales? To increase it by 50%? (c) What form of activity analysis is this: reduction, sharing, elimination, or selection? Round your answers to two decimal places. (a) The unit savings, based on the assumption, is $ (a) Calculate income based on current sales, prices, and costs. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Question not attempted Score: 0/12 Mays Electronics Income Based on Current Pricing 1 Sales 2 Costs 3 Income (b) Calculate the income by using a $14 price (assume that current market share is maintained). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Question not attempted. Score: 0/12 Mays Electronics Income Based on Maintaining Current Market Share 1 Sales 2 Costs Income (c) Calculate the income by using a $12 price, assuming that the maximum cost reduction possible is achieved (including Requirement 4's reduction). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Question not attempted. Score: 0/12 Mays Electronics Income Based on Increasing Market Share 1 Sales 2 Costs 3 Income