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Joe from Joe's Mowers wants to make some changes to his business. He has asked each of his department managers (Production, Marketing and Sales) to
Joe from Joe's Mowers wants to make some changes to his business. He has asked each of his department managers (Production, Marketing and Sales) to submit a plan for growth to you the General Manager. Currently Joe is selling 500 lawn mowers a month at $250 each. His variable cost per lawnmower is $160 each. His fixed cost per month are $ 28,000. The Production Department is considering three different alternatives. A. Switch to better raw materials which would increase Variable cost by 12.5% per unit. They believe this would increase brand awareness and consequently increase unit sales by at least 15% B. Switch to lower quality materials and become a "price conscience" distributer. The amount that the Production department felt best was to decrease Variable cost by 20%. They believe that this would likely reduce unit sales by no more than 15%. C. Finally the Production Department thought a combination of lower quality materials reducing variable costs by 15% combined with a lower retail price of $225 per mower would increase unit sales by at least 25%. Question 4. How much money will Joe make in each of the separate situations? Question 5. Which of the scenarios is best and why
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