Ford Motor Company (FORD) sales jumped 31.5 % during June 2022 in the United States as compared to the prior month. Sales of Fords F-series trucks and the Explorer, Expedition, and Navigator SUV models drove the sales growth. According to a Bloomberg article earlier this year, the F-150 Series product line is Fords most profitable product line.

Ford has three categories of vehicles, Trucks, SUVs, and Cars. According to Fords 2021 Form 10-K, the combined US unit sales of its vehicles in 2021 (both retail and wholesale) can be found in the attached Excel file. In addition, hypothetical average sales prices and average variable cost per unit are given.

Qs

a) According to the unit sales and hypothetical sales and cost data given, what would Fords weighted-average contribution margin be?

b) Assume that Fords sales revenue is the same as last years sales revenue, yet its profits increase. How might this be possible?

c) Assume that consumer demand for cars is expected to decrease significantly. What strategy might Ford use to deal with this trend so that its net income does not also decrease?

\begin{tabular}{|l|r|r|c|c|c|} \hline & \multicolumn{1}{|c|}{ A } & B & \multicolumn{1}{c|}{ C } & D & E \\ \hline & & & & & Average \\ & & & %oftotalunitsales(Unitsales/Totalunitsales) & Averagesalespriceperunit* & variablecostperunit* \\ \hline 1 & & & & 52,000 & 38,480 \\ \hline 2 & Trucks & 1,953,670 & & 45,000 & 34,650 \\ \hline 3 & SUVs & 1,551,817 & & 31,000 & 25,110 \\ \hline 4 & Cars & 116,949 & & NA & NA \\ \hline 5 & Total & 3,622,436 & & & \\ \hline \hline \end{tabular}