Question
Mandy, who is starting a new business, is considering a couple of business strategies. Her goal is to break-even in her first year. Strategy A:
Mandy, who is starting a new business, is considering a couple of business strategies. Her goal is to break-even in her first year.
Strategy A: High-end products
Expected monthly sales volume: 100 units Sale price: $20 per unit Variable cost: $5 per unit Fixed annual costs: $20,000
Strategy B: Average products
Expected monthly sales volume: 200 units Sale price: $10 per unit Variable cost: $4 per unit Fixed annual costs: $15,000
Assuming Mandy is expecting 10% per year sales growth for the next five years, which strategy would you recommend that she go with? Discuss pros and cons of each and give her business advice.
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
