Problem 12-2 CB is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be 1,600,000 The booth will be open CB also plans to add a new product line, Basehits, which will have a variable cost of She will continue to sell the existing product, Noerrors, which will have a variable cost of CB believes that the salesperson will spend approximately $ 240 $1,440 $800 60 180 hours during the trade show per package per package hours selling Noerrors and hours selling Basehits Assume that the fixed costs will be allocated based on selling hours for each product. Hint : Calculate fixed cost rate per hour so you can spread fixed costs to each product Required 1. Determine the estimated total cost (including fixed and variable costs) and cost per unit of each product, assuming that the salesperson is able to sell 640 units of Noerrors salesperson is able to sell 400 units of Basehits 2. Determine the estimated total cost (including fixed and variable costs) and cost per unit of each product, assuming that the salesperson is able to sell 1600 units of Noerrors salesperson is able to sell 800 units of Basehits 3. Explain why the cost per unit figures calculated in Requirement a are different from the amounts calculated in Requirement b. Also explain how the differences in estimated cost per unit will affect pricing decisions. Problem 12-2 CB is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be 1,600,000 The booth will be open CB also plans to add a new product line, Basehits, which will have a variable cost of She will continue to sell the existing product, Noerrors, which will have a variable cost of CB believes that the salesperson will spend approximately $ 240 $1,440 $800 60 180 hours during the trade show per package per package hours selling Noerrors and hours selling Basehits Assume that the fixed costs will be allocated based on selling hours for each product. Hint : Calculate fixed cost rate per hour so you can spread fixed costs to each product Required 1. Determine the estimated total cost (including fixed and variable costs) and cost per unit of each product, assuming that the salesperson is able to sell 640 units of Noerrors salesperson is able to sell 400 units of Basehits 2. Determine the estimated total cost (including fixed and variable costs) and cost per unit of each product, assuming that the salesperson is able to sell 1600 units of Noerrors salesperson is able to sell 800 units of Basehits 3. Explain why the cost per unit figures calculated in Requirement a are different from the amounts calculated in Requirement b. Also explain how the differences in estimated cost per unit will affect pricing decisions
