Superior Manufacturing Company Case Memo. Hello, I need help with a Case Memo Question and I am not sure where to begin. I have posted the entire case and all the instructions for the case memo below. You will notice it gives you specific instrucions in the "Instructions for the superior case" information at the very end, and I only need assistance using that information given.

Please only focus on " Question number 2: Should superior lower as of January 1, 2006 its price of product 101? To what price? " as this is the only question I need help with. Thank you again.

Superior Manufacturing Company In February 2005, Herbert Waters was appointed general manager of the Superior Manufacturing Company by Paul Harvey, president. Waters, 56, had wide executive experience in manufacturing products similar to t of Superior. The appointment of Waters resulted from management problems arising from the death of Richard Harvey, founder and, until his death in early 2004, president of Superior. Paul Harvey had only four years' experience with the company, and in early 2005 was 34 years old. His father had hoped to train him over a 10-year period, but his untimely death had cut this seasoning period short. The younger Harvey became president when his father died and had exercised full control until he hired Waters. New Management ecisions and noted that morale of Paul Harvey knew that during 2004 he had made several poor d the organization had suffered, apparently through lack of confidence in him. When he received the income statement for 2004 (see Exhibit 1) showing a net loss of $688,000 during a good business year, he knew he needed help. He attracted Waters from a competitor by offering a stock option incentive in addition to salary, knowing that Waters wanted to acquire a financial competence for his retirement. The two men came to a clear understanding that Waters, as general manager, had full authority to execute any changes he desired. In addition, Waters would explain the reasons for his decisions to Harvey and thereby train him for successful leadership upon Waters's retirement. Upon taking office in February 2005, Waters decided against immediate major changes. Rather, he chose to analyze 2004 operations and to wait to see results for the first half of 2005. He instructed the accounting department to provide detailed expenses and earnings statements by products and departments for 2004 (see Exhibit 2). In addition, he requested an explanation of the nature of the company's costs including their expected future behavior (see Exhibit 3) Company and Industry The Superior Manufacturing Company made only three industrial products: 101, 102, and 103. They were sold by the company's sales force for use in the processes of other manufacturers. All of the sales force, on a salary basis, sold the three products but in varying proportions. Superior sold