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Nicole Company produces two products: sweatshirts and hoodies. The projected income for the coming year, segmented by product line, follows: The selling prices are $30
Nicole Company produces two products: sweatshirts and hoodies. The projected income for the coming year, segmented by product line, follows: The selling prices are $30 for sweatshirts and $50 for hoodies. Required: 1. Compute the number of units of each product that must be sold for Nicole Company to break even. (5 marks). 2. Assume that the marketing manager changes the sales mix of the two products so that the ratio is three sweat shirts to five hoodies. Repeat Requirement 1 . (2 marks) 3. Refer to the original data. Suppose that Nicole can increase the sales of squares with increased advertising. The extra advertising would cost an additional $245,000, and some of the potential purchasers of hoodies would switch to sweatshirts. In total, sales of sweatshirts would increase by 25,000 units, and sales of hoodies would decrease by 5,000 units. Would Nicole be better off with this strategy? Provide valuable advice to management. (7 marks)
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