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The Jeans Company is planning to introduce Brute - - a new jean product that is made from material that stretches but retains the traditional

The Jeans Company is planning to introduce Brute-- a new jean product that is made from material that stretches but retains the traditional look of denim jeans. Projected cost for a pair of stretch denim jeans is $5.25 in material and $3.75 in labor. Overhead costs will total $1,750,000 per year, and marketing and administrative overhead costs will come to $750,000 per year. With a market potential of 700,000 pairs for the year, the Marketing Manager is considering four different price alternatives: $14.25, $16.50, $18.75, and $21.25. The Marketing Managers projections revealed the following price-volume relationship: Price alternative Sales projection (pairs of jeans) $14.25600,000 $16.50525,000 $18.75375,000 $21.25175,000
A1. What is the Total Fixed Cost for the Jeans Company?
A2. What is the Unit Variable Cost of a pair of Brute jeans?
A3. What is the break-even point at a retail price of $14.25 per pair of Brute jeans?
A4. The projected profits at a retail price of $ 21.25 per pair is __________.
A5. If the Jeans Company aims to maximize its profits, what should the retail price of Brute jeans be?
A6. Anticipating stiff competition in the market, the Jeans Company is considering offering its Brute jeans at a retail price of $12.50 per pair. Would you recommend the retail price of $12.50 to the Marketing Manager? Why or why not?

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