Question
Jenny Lupine, the manager for a division that produces a variety of paper products, was considering the divisional manager's request for a sales forecast for
Jenny Lupine, the manager for a division that produces a variety of paper products, was considering the divisional manager's request for a sales forecast for a new line of paper napkins. The divisional manager was gathering data so that he could choose between two different production processes
The first process would have a variable cost of $10 per case produced and fixed costs of$100,000
The second process would have a variable cost of $6 per case and fixed costs of$200,000.
The selling price would be $30 per case in either process.Jenny had just received information from the marketing department that projected annual sales of
30,000 cases for the new product. Jenny was reluctant to report this forecast to the divisional
manager. The first process was labor intensive and her friend Ed would be appointed the line
supervisor. If the second process was chosen, Ed and many other workers would be laid
off. After some consideration, Jenny revised the sales projection to 22,000 cases.
Why did Jenny alter the sales forecast?
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