CompanyX, a small (fictitious) company, is considering switching to the 2-year Acme2 battery for the smartphones it issues to employees. CompanyX supplies 1 phone each to 100 employees. The battery that CompanyX currently uses lasts 1 year, costs CompanyX $50 for the battery itself, and costs CompanyX $60 in labor to replace each battery. Assume the replacement labor cost stays constant no matter what battery is used. What is the VIU price for the Acme2 battery in this application? HINT: First, calculate the current annual cost related to batteries, and then set that amount to the VIU cost equation, including parts and labor. $160 $110 $50 $42.50
CompanyX, a small (fictitious) company, is considering switching to the 2-year Acme2 battery for the smartphones it issues to employees. CompanyX supplies 1 phone each to 100 employees. The battery that CompanyX currently uses lasts 1 year, costs CompanyX $50 for the battery itself, and costs CompanyX $60 in labor to replace each battery. Assume the replacement labor cost stays constant no matter what battery is used. What is the VIU price for the Acme2 battery in this application? HINT: First, calculate the current annual cost related to batteries, and then set that amount to the VIU cost equation, including parts and labor. $160 $110 $50 $42.50
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
CompanyX, a small (fictitious) company, is considering switching to the 2-year Acme2 battery for the smartphones it issues to employees. CompanyX supplies 1 phone each to 100 employees. The battery that CompanyX currently uses lasts 1 year, costs CompanyX $50 for the battery itself, and costs CompanyX $60 in labor to replace each battery. Assume the replacement labor cost stays constant no matter what battery is used. What is the VIU price for the Acme2 battery in this application? HINT: First, calculate the current annual cost related to batteries, and then set that amount to the VIU cost equation, including parts and labor.
$160
$110
$50
$42.50
Transcribed Image Text:Parameter, Acme1
Design Life
Fixed Cost
Investment
Price Elasticity
Target ROI
Markup Percentage 20%
Unit Sales
Metric
Variable Cost
1 year
Question:
$20,000
Replacement Labor $60
$30,000
1.00
20%
5000/ year
$30
Description
Lifespan before unit needs
to be replaced
Overhead costs not
changing with quantity
produced
Money invested for
development of Battery1
Desired return on sales
Price elasticity of demand
Cost of labor to replace
battery in smartphone
Target return on
investment for new
projects
Quantity of units forecast
to sell
Labor and material costs
to produce each unit
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