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We have the following current information about our company called FVYK. The board of directors' expectation from you as CEO is that you increase
We have the following current information about our company called FVYK. The board of directors' expectation from you as CEO is that you increase the total profit by exactly 12%, but while doing this, you should not reduce the operating leverage below two, and there is no harm in increasing it. You cannot reduce your sales (units) and you can increase them up to 42% at most, but of course this means accepting a decrease in your prices. According to your marketing manager:The formula "Required % decrease in price = Desired % increase in sales (units)/4" is valid for our company and sector within the above limits. You think you can improve your unit variable costs by up to 5%, but you also know that every 1% improvement means a 1,000 USD increase in fixed costs Unit Price 1,000 USD Profit 1,286,000 USD Fixed Cost 714,000 USD Actual Sales 10,000 units wwwwwwwww am wwwww a- What is Unit Variable Cost? (USD) b- What is the Break-Even Point Production Amount? (units) c- - What is the Break-Even Point Sales Amount? (USD) d- - Is it possible to meet the YK request under these conditions? How? Explain specifically. e- Can you provide the board with something better than the 10% increase in profit they want? How? Explain specifically. Show your calculations step by step in your answers, and state your assumptions clearly if you need to make any.
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