THE CRIMSON PRESS CURRICULUM CENTER THE CRIMSON GROUP, INC. Energy Devices, Inc. Energy Devices, Inc. (EDI), purchased energy-saving devices in bulk, repackaged them, and sold them to hardware stores in various locales. Its products consisted of shower nozzles that re-strict the flow of water, thermostats with timers, and storm windows. Management was preparing the budget for the upcoming fiscal year. Preliminary figures, by product, are shown below: Shower Nozzles Storm Windows Total 1,500 Number of items Thermostats 200 S80 800 500 Price per item $10 $100 Total revenue $16,000 $50,000 $74,000 $8.000 8 Purchase cost per item 70 95 6,400 14,000 47,500 67,900 Total purchase costs Allocated fixed expenses (includes all labor) Total costs 27.040 $33,440 6,760 $20,760 16.900 $64,400 50,700 $118,600 $(25,440) $(4,760) $(14,400) $(44,600) Profit (Loss) Assignment 1. What is breakeven for the year? What concerns, if any, do you have about this breakeven figure? 2. Given that its preliminary budget shows a sizable loss, EDI must consider ways to eliminate this loss. What budgetary options should management consider? 3. EDI thinks it can increase the sales of its products by advertising in local newspapers, and has decided to spend $1,000 on advertising. To get the most out of its advertising dollar, it has decided to concentrate on one product only. Given financial concerns only, please discuss how it should decide which product to emphasize? 4. One of the managers of EDI has suggested that, since the company loses so much on shower nozzles, it should discontinue selling them. What advice would you give EDI about this decision