What is the value of erosion? General Accounting question CCool Comfort currently sells 300 Class A spas, 450 Classspas, and 200 deluxe model spas each year. The firm isconsidering adding a mid-class spa and expects that, if itdoes, it can sell 375 of them. However, if the new spa isadded, Class A sales are expected to decline to 225 unitswhile Class C sales are expected to decline to 200. Thesales of the deluxe model will not be affected. Class Aspas sell for an average of $12,000 each. Class C spas arepriced at $6,000 and the deluxe model sells for $17,000each. The new mid-range spa will sell for $8,000. What isthe value of erosion?a. $2,400,000b. $1,200,000c. $3,900,000d. $600,000e. $1,800,000

Step 1: Define SaleSale is process which occurs between two or more people in order to exchange…

Answered: C Cool Comfort currently sells 300…

Principles of Accounting Volume 2

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Chapter3: Cost-volume-profit Analysis

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Problem 9EB: Baghdad Company produces a single product. They have recently received the result of a market survey...

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Cool Comfort currently sells 360 Class A spas, 520 Class C spas, and 230 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that, if it does, it can sell 375 of them. However, if the new spa is added, Class A sales are expected to decline to 255 units while Class C sales are expected to decline to 240. The sales of the deluxe model will not be affected. Class A spas sell for an average of $13,500 each. Class C spas are priced at $7,200 and the deluxe model sells for $19,000 each. The new mid-range spa will sell for $11,000. What is the value of erosion?
Bubbly Waters currently sells 440 Class A spas, 590 Class spas, and 340 deluxe modeſ spas each year. The firm is considering adding a mid-class spa and expects that if it does, it can sell 515 units per year. However, the new spa is added, Class A sales are expected to decline to 295 units while the Class C sales are expected to increase to 615. The sales of the deluxe model will not be affected. Class A spas sell for an average of $14,700 each. Class C spas are priced at $7,400 and the deluxe models sell for $18,400 each. The new mid-range spa sell for $9,400. What annual sales figure should you use in your analysis?
Bubbly Waters currently sells 320 Class A spas, 470 Class C spas, and 220 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that if it does, it can sell 395 units per year. However, if the new spa is added, Class A sales are expected to decline to 235 units while the Class C sales are expected to increase to 495. The sales of the deluxe model will not be affected. Class A spas sell for an average of $12,300 each. Class C spas are priced at $6,200 and the deluxe models sell for $17,200 each. The new mid-range spa will sell for $8,200. What annual sales figure should you use in your analysis?
What is the value of erosion?
Hyperion Inc., currently sells its latest high-speed color printer, the Hyper 500, for $350. Its cost of goods sold for the Hyper 500 is $200 per unit, and this year's sales (at the current price of $350) are expected to be 20,000 units. Hyperion plans to lower the price of the Hyper 500 to $300 one year from now. a. Suppose Hyperion considers dropping the price to $300 immediately, (rather than waiting one year). By doing so, it expects to increase this year's sales by 25% to 25,000 units. What would be the incremental impact on this year's EBIT of such a price drop? b. Suppose that for each printer sold, Hyperion expects additional sales of $75 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 70% on ink cartridges. What is the incremental impact on EBIT for the next three years of dropping the price immediately (rather than waiting one year)?
What is the value of erosion?
Hyperion, Inc. currently sells its latest high-speed color printer, the Hyper 500, for $350. It plans to lower the price to $300 next year. Its cost of goods sold for the Hyper 500 is $200 per unit, and thi year's sales are expected to be 20,000 units.a) Suppose that if Hyperion drops the price to $300 immediatley, it can increase this year's sales by 25% to 25,000 units. What would be the incremental impact on this eyar's EBIT of such a price drop?b) Suppose that for each printer sold, Hyperion expects additional sales of $75 per year on ink cartridges for the next years, and Hyperion has a gross profit margin of 70% on ink cartridges. What is the incremntal impact on EBIT for the next three years of a priced drop this year?
Under pressure from its board of directors, management at Roadside is planning to enter the conventional battery-powered flashlight market. Roadside expects to sell this boring product to wholesalers for $18.12 per unit. Relevant fixed costs will total $334,573, and variable costs to make this product will be $14.57 per unit. Background research estimates the size of the market for conventional flashlights at 1.8 million units per year. If sales of this unit reach breakeven, what market share will Roadside have? Report your answer as a percent. Report 27.5%, for example, as "27.5". Rounding: tenth of a percent.
Under pressure from its board of directors, management at Roadside is planning to enter the conventional battery-powered flashlight market. Roadside expects to sell this boring product to wholesalers for $18.16 per unit. Relevant fixed costs will total $343,600, and variable costs to make this product will be $12.15 per unit. Background research estimates the size of the market for conventional flashlights at 1.8 million units per year. If sales of this unit reach breakeven, what market share will Roadside have? Report your answer as a percent. Report 27.5%, for example, as "27.5". Rounding: tenth of a percent. Your Answer: Answer
Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $354. Its cost of goods sold for the Hyper 500 is $202 per unit, and this year's sales (at the current price of $354) are expected to be 24,000 units. Hyperion plans to lower the price of the Hyper 500 to $303 one year from now. a. Suppose Hyperion considers dropping the price to $303 immediately, (rather than waiting one year). By doing so it expects to increase this year's sales by 30% to 31,200 units. What would be the incremental impact on this year's EBIT of such a price drop? b. Suppose that for each printer sold, Hyperion expects additional sales of $82 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 61% on ink cartridges. What is the incremental impact on EBIT for the next three years of dropping the price immediately (rather than waiting one year)? a. Suppose Hyperion considers dropping the price to $303 immediately, (rather than…
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Expo Lube is interested in producing and selling an industrial line of oil filters. Market research indicates that wholesale customers are currently willing to pay $8 for similar filters, and that Expo Lube could sell 80,000 units per year at that price. a. If Expo Lube requires a 19 percent return on sales, what is its target cost for the proposed industrial line of filters? b. Assume that market research reveals several of Expo Lube’s direct competitors are likely to lower the wholesale price of similar filters to $7 per unit. To remain competitive, what will Expo Lube’s target cost have to be to maintain a 19 percent return on sales? c. At a wholesale price of $7, Expo Lube estimates that it can sell 83,100 industrial filters per year instead of 80,000 units. Assuming its target costs are attainable, how much more or less profit per year will the company earn at the $7 wholesale price compared to the initial wholesale price estimate of $8?

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