Question
For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently
For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently offer two core washer and dryer sets: a high-end model and an economic model.
. For your first assignment, management has provided the following revenue and cost information:
High-End Set | Economical Set | |||
Sales price | $3,500 | per unit | $1,000 | per unit |
Labor | $875 | per unit | $250 | per unit |
Materials | $1400 | per unit | $300 | per unit |
Direct fixed costs | $25,000 | per month | $16,500 | per month |
Allocated fixed costs | $85,000 | per month | $85,000 | per month |
- They want a better understanding of their business to make budgeting and sales goals decisions and have asked you determine some values
- They expect the product lines to fully absorb the costs allocated to them. They have also asked that you show each step in your calculations so that they can understand your analysis. (Note: you will be graded on your intermediary values.)
Question: Determine the following:
a. Contribution Margins for each product line
b. Break-even quantities for each product line
c. Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price)
d. Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price)
Once you have determined these amounts, they have asked that you:
- present the information
- describe how you performed your calculations
- and explain what the results mean
Note:
- Please describe the circumstances of the case study and make the required recommendations.
- Explain your approaches to the problems.
- perform relevant calculations and analyses and justify your recommendations.
- Evaluate the results and explain what each calculated value means. Ensure your work and conclusions are thoroughly supported.
Superior presentations will:
- Describe the circumstances.
- Perform all calculations correctly.
- Articulate how the calculations were performed.
- Evaluate the computations and explain their meanings.
- Make recommendations, supported by well-thought-out rationale and considering various factors that could impact the recommendations.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started