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The Rosa model of Mohave Corp. is curtently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to
The Rosa model of Mohave Corp. is curtently manufactured as a very plain umbrella with no decoration. The company is considering changing this product to a much more decorative model by adding a silk screened design and embellishments. A summary of the expected costs and revenues for Mohave's two options follows: Rosa Decorated brella well Estimated desand 30,000 units 30,000 to Estimated sales price $15.00 $45.00 Estimated manufacturing cost per unit Direct materials 5.22.50 Direct labor 5.50 Varcable manufacturing overhead 4.50 6.50 Fixed manufacturing overhead 72.00 Unit manufacturing cost Muitional development cost Required: 1. Determine the increase or decrease in profit ut Mohave sells the Rosa Umbrella with the additional decorations 2. Should Mohave add decorations to the Rosa umbrella? 3-0. Suppose that the higher price of the decorated umbrellas expected to reduce estimated demand for proto 000 Determine the increase or decrease in profit if Mohave sets the Rosa Umbrella with the additional decorations 3-b. Should Mohave add decorations to the Rosa umbrella? Complete this question by entering your answers in the tabs below we ROSd Umbrella with the additional decorations 3-b. Should Mohave add decorations to the Rosa umbrella? Complete this question by entering your answers in the tabs below. Reg 1 Req2 Reg 3A Reg 38 Suppose that the higher price of the decorated umbrella is expected to reduce estimated demand for this product to 28.000 units. Determine the increase or decrease in profit if Mohave sells the Rosa Umbrella with the additional decorations Rosa Decorated Umbrella Umbrella Incremental Sales Revenue Variable Costs Contribution Margin Additional Development Costs Diferential Proft (Loss)
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