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Information on Guadalupe Ltd . ' s three products follows: A , B , & C Unit sales per month. . . . . 1
Information on Guadalupe Ltds three products follows:
A B & C
Unit sales per month.
Selling price per unit. $ $ $
Variable costs per unit.
Unit contribution margin. $ $ $
Determine the effect each of the following situations would have on monthly profits. Each situation below should be evaluated independently of all others.
a Product A is discontinued.
b Product A is discontinued, and the subsequent loss of customers causes sales of Product B to decline by units. Hint: The answer is an increase in monthly profits by $ Please show how this answer is calculated.
c The selling price of A is increased to $ with a sales decrease of units.
d The price of Product B is increased to $ with a resulting sales decrease of units. However, some of these customers shift to Product A; sales of Product A increased by units. Hint: The answer is an increase in monthly profits of $ Please show how this answer is calculated.
e Product A is discontinued, and the plant in which A was produced is used to produce D a new prod uct. Product D has a unit contribution margin of $ Monthly sales of Product D are predicted to be units.
f The selling price of Product C is increased to $ and the selling price of Product B is decreased to $ Sales of C decline by units, while sales of B increase by units. Hint: The answer is a decrease in monthly profits of $ Please show how this answer is calculated.
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