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Description Below is the product line performance for a firm. Area of Performance Silicon Primary Specialty Basic (millions) Pigments Products Products Colors Color Enhancers Overall
Description Below is the product line performance for a firm. Area of Performance Silicon Primary Specialty Basic (millions) Pigments Products Products Colors Color Enhancers Overall Total Sales Revenue 85.0 56.0 32.0 20.0 30.0 223.0 Cost of Goods Sold 45.0 48.0 28.0 18.0 27.0 166.0 Gross Profit 40.0 10.0 8.0 2.0 3.0 63.0 Marketing Sales & Expenses 7.0 5.0 3.0 1.0 2.0 18.0 Other Operating Expenses 8.0 4.0 3.0 1.0 2.0 18.0 Net Profit (pre-tax) 25.0 1.0 2.0 0.0 -1.0 27.0 Suppose that the firm wishes to improve its profitability. It is considering two options: (A) Completely eliminate two of its product lines (Basic Colors & Color Enhancers). (B) Reduce the price its of Silicon Pigments product by 5%; this should result in a 20% increase in sales of this product line. Task: Determine which of the two options yields the highest profitability for the firm. Begin your answer with either A or B, then justify why your recommended option is superior to the other one. For full credit, be sure to show all your relevant calculations, presented in a way that can be easily understood
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