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QUESTION 1 (15 Marks) XYZ Company produces and sells AAA batteries. The company introducing a new, the heavy-duty HD-240 model and must decide what
QUESTION 1 (15 Marks) XYZ Company produces and sells AAA batteries. The company introducing a new, the heavy-duty HD-240 model and must decide what price to set for the HD-240 model. An estimated demand schedule for the product follows: Price HD-240 model units demanded $5 80,000 6 72,000 7 56,000 8 48,000 9 36,000 10 30,000 Estimated costs follow: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs $2 per unit $40,000 per year $1 per unit $20,000 per year Required: 1. Prepare a schedule showing management the total revenue, total cost, and total profit or loss for each selling price. (5 Marks) 2. Which price do you recommend to the management of XYZ for HD-240 model? Explain your answer (5 Marks) 3. Calculate break break-even point at the recommended price? (5 Marks)
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