Answered step by step
Verified Expert Solution
Question
1 Approved Answer
If an expert can please create a memo and include at least two to three lengthy paragraphs in your own words and also be straight
If an expert can please create a memo and include at least two to three lengthy paragraphs in your own words and also be straight to the point and not include salutations or signature blocks. If this can be done as soon as possible I would really appreciate it. Please and thank you in advance.
The following conversation took place between Juanita Jackson, Vice President of Marketing, and Les Miles, Controller of Diamond Computer Company: Juanita: I am really excited about our new computer coming out. I think it will be a real market success. Les: I'm really glad you think so. I know that our success will be determined by our price. If our price is too high, our competitors will be the ones with the market success. Juanita: Don't worry about it. We'll just mark our product cost up by 25%, and it will all work out. I know we'll make money at those markups. By the way, what does the estimated product cost look like? Les: Well, there's the rub. The product cost looks as if it's going to come in at around $1,200. With a 25% markup, that will give us a selling price of $1,500. Juanita: I see your concern. That's a little high. Our research indicates that computer prices are dropping and that this type of computer should be selling for around $1,250 when we release it to the market. Les: I'm not sure what to do. Juanita: Let me see if I can help. How much of the $1,200 is fixed cost? Les: About $200. Juanita: There you go. The fixed cost is sunk. We don't need to consider it in our pricing decision. If we reduce the product cost by $200, the new price with a 25% markup would be right at $1,250. Boy, I was really worried for a minute there. I knew something wasn't right. Write a brief memo from Les Miles to Juanita Jackson (a) responding to her solution to the pricing problem, and (b) explaining how target costing could be used to solve the problem. A memo is not a letter. Memos do not have salutations or signature blocksStep 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