Question
I. The capacity of the company is 70.000 units of electrical toys and can sell only 50.000 units for 50$ each. Fixed costs are
I. The capacity of the company is 70.000 units of electrical toys and can sell only 50.000 units for 50$ each. Fixed costs are 720.000$ and CMR 36%. New market research shows that decreasing the sale price 4$, the sale quantity will lead to an increase of 14.000 units. a. Discuss the decrease in the sale price based on financial reasons. b. Another suggestion to business management is to make 400.000$ investment to increase the capacity to 90.000 units. Such investment will increase the initial CMR to 50%. Discuss the investment suggestion with financial reasons.
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a Discussion on Decreasing the Sale Price Currently the company sells 50000 units at a price of 50 each generating a total revenue of 50000 50 2500000 ...Get Instant Access to Expert-Tailored Solutions
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
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