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Elliott Trophies makes three types of awards for organizations to give employees or team members. The following are its prices and costs: table [
Elliott Trophies makes three types of awards for organizations to give employees or team members. The following are its prices and costs:
tablePrice per,Variable Cost per,Units SoldUnit,Unit,per YearSport$$EmployeeCelebrity
Fixed costs of $ per year include building and equipment costs, marketing costs, and the costs of administration. Elliott Trophies is subject to a percent tax rate on income.
Required:
a Given this information, how much will Elliott Trophies earn each year after taxes?
b Assuming the given sales mix is the same at the breakeven point, at what sales revenue does Elliott Trophies break even?
c Assuming the given sales mix, at what sales revenue will the company earn $ per year after taxes?
d Elliott Trophies is concerned about the future of the Celebrity trophy market, given recent costcutting by companies and is considering becoming more specialized in the Sport and Employee market. If Elliott Trophies drops the Celebrity model, fixed costs will fall to $ per year. If it follows through with this plan, Elliott Trophies expects that the relative sales mix between the Sport and Employee models will remain the same. That is for every units of the Sport model sold, Elliott Trophies would expect to sell units of the Employee model. How many units of the Sport and Employee models would Elliott Trophies have to sell to achieve the same aftertax income it currently earns with the three models?
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