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Please see attached need help with two problemsPlease see attached need help with two problemsPlease see attached need help with two problems Nielsen Associates provides
Please see attached need help with two problemsPlease see attached need help with two problemsPlease see attached need help with two problems
Nielsen Associates provides marketing services for a number of small manufacturing firms. Nielsen receives a commission of 10 percent of sales. Operating costs are as follows: Unit-level costs $0.02 per sales dollar Sales-level costs $300 per sales order Customer-level costs $600 per customer per year Facility-level costs $60,000 per year (a) Determine the minimum order size in sales dollars for Nielsen to break even on an order. $Answer 0 (b) Assuming an average customer places five orders per year, determine the minimum annual sales required to break even on a customer. $Answer 0 (c) What is the average order size in (b)? $Answer (d) Assuming Nielsen currently serves 100 customers, with each placing an average of five orders per year, determine the minimum annual sales required to break even. $Answer (e) What is the average order size in (d)? $Answer 0 (f) Explain the differences in the answers to (a), (c), and (e). Even if individual orders have a positive contribution, some customers may be unprofitable. In multiple customer firms the breakeven point decreases as the number of customers increases. The most important costs to cover are unit level costs. In the longrun the most important costs are facility level costs. Check CVP Analysis and Special Decisions Sweet Grove Citrus Company buys a variety of citrus fruit from growers and then processes the fruit into a product line of fresh fruit, juices, and fruit flavorings. The most recent year's sales revenue was $4,200,000. Variable costs were 60 percent of sales and fixed costs totaled $1,400,000. Sweet Grove is evaluating two alternatives designed to enhance profitability. One staff member has proposed that Sweet Grove purchase more automated processing equipment. This strategy would increase fixed costs by $300,000 but decrease variable costs to 54 percent of sales. Another staff member has suggested that Sweet Grove rely more on outsourcing for fruit processing. This would reduce fixed costs by $300,000 but increase variable costs to 65 percent of sales. Round your answers to the nearest whole number. (a) What is the current breakeven point in sales dollars? $Answer (b) Assuming an income tax rate of 38 percent, what dollar sales volume is currently required to obtain an aftertax profit of $300,000? $Answer (c) In the absence of income taxes, at what sales volume will both alternatives (automation and outsourcing) provide the same profit? $Answer (d) Briefly describe one strength and one weakness of both the automation and the outsourcing alternatives. Automation has higher profits if sales increase. Outsourcing has less risk and a lower break even point. Automation has higher profits if sales increase and a lower breakeven point. Outsourcing has less risk. Automation has less risk and a lower breakeven point. Outsourcing has higher profits if sales increase. Automation has less risk. Outsourcing has higher profits if sales increase and a lower break even pointStep by Step Solution
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