Garden Company has the capacity to produce 200,000 tillers. Variable costs are $30 per tiller. Fixed costs are $1,500,000. Should the company aim to sell 200,000 at $100 each, 160,000 at $125 each, or 125,000 at $160 each? Explain your recommendation. What will the company have to do to carry out the strategy you recommend?
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- Garden Company has the capacity to produce 200,000 tillers. Variable costs are $30 per tiller. Fixed costs are $1,500,000. Should the company aim to sell 200,000 at $100 each, 160,000 at $125 each, or 125,000 at $160 each? Explain your recommendation. What will the company have to do to carry out the strategy you recommend?The Shine Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model: Variable manufacturing costs Applied fixed manufacturing overhead Variable selling and administrative costs Applied fixed selling and administrative costs What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 235%? Multiple Choice $1,565.25. $1,700.25. $1,835.25. $2,060.25. None of these answer choices is correct. $ 440 220 175 190The Gargus Company, which manufactures projection equipment, is ready to introduce a new line of portable projectors. The following data are available for a proposed model: Variable manufacturing costs Applied fixed manufacturing overhead Variable selling and administrative costs Applied fixed selling and administrative costs $ 380 190 145 160 What price will the company charge if the firm uses cost-plus pricing based on total variable cost and a markup percentage of 205%?
- You want to start a firm whose output you believe you can sell for $25 per unit. The operation will require fixed costs of $130,000, and the variable costs are expected to be $16 a unit. a.) What will be the break-even level of output? b.) If fixed costs reduce to $100,000 and the variable costs reduced to $15, what is the new break-even level of output?Your organization sells tables for $200 each. The fixed cost is $25,000 per annum with current demand at 700 tables per annum. Each table has a direct material cost of $65 and direct labour cost of $83. Required: A. I) what is profit based on the current demand? i) How many tables should be sold to get a profit of $5,000? A. The organization is considering two alternative proposals. i. Reducing selling price by 15% which is expected to increase demand by 10% ii. Increase selling price by 5% which is expected to reduce demand by 10% What will be the profits or loss under each alternative proposal?Use the following information for the next 2 questions (8 & 9). Division X produces and sells a product to external and internal customers. Per-unit information about its operations include: Selling price per unit to external customers $250 Variable manufacturing costs per unit 115 Fixed manufacturing overhead costs per unit 70 8. If X is operating at capacity and has unlimited external customer demand, what should be the minimum transfer price? 9. If X has sufficient excess capacity to meet internal demand, what should be the minimum transfer price?
- Southland Corporation’s decision to produce a new line of recreational products resulted in the need to construct either a small plant or a large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decided to view the possible long-run demand as low, medium, or high. The following payoff table shows the projected profit in millions of dollars: What is the decision to be made, and what is the chance event for Southland’s problem? Construct a decision tree. Recommend a decision based on the use of the optimistic, conservative, and minimax regret approaches.Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 433.00 per unit Variable costs 193.00 per unit Fixed costs 645,000 per year Assume that the projected number of units sold for the year is 3,900. Consider requirements (b), (c), and (d) independently of each other. Questions: What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?Referring to question 13, if the company had an opportunity to sell 15,000 additional units at $12 per unit, and the additional sales would not affect its current expected sales, should the company take this special order? (Show work for credit) A. Yes can make $30,000 B. Yes can make $90,000 C. No will lose $30,000 D. No will lose $90,000 The lowest contribution margin per scarce resource is the most profitable. A. True B. False A cost that will not be affected by later decisions is termed an opportunity cost. A. True B. False Eliminating a product or segment may have the long-term effect of reducing fixed costs. A. True B. False Differential revenue is the amount of income that would result from the best available alternative proposed use of cash. A. True B. False In deciding whether to accept business at a special price, the short-run price should be set high enough to cover all variable costs and expenses. A. True B. False
- The Martin-Beck Company operates a plant in St. Louis with an annual capacity of 30,000 units. Product is shipped to regional distribution centers located in Boston, Atlanta, and Houston. Because of an anticipated increase in demand, Martin-Beck plans to increase capacity by constructing a new plant in one or more of the following cities: Detroit, Toledo, Denver, or Kansas City. The estimated annual fixed cost and the annual capacity for the four proposed plants are as follows: Proposed Plant Detroit Toledo Denver Kansas City $175,000 Annual Fixed Cost Annual Capacity 40,000 $300,000 $375,000 $500,000 10,000 20,000 30,000 The company's long-range planning group developed forecasts of the anticipated annual demand at the distribution centers as follows: Distribution Center Annual Demand Boston 30,000 Atlanta 20,000 Houston 20,000Can you please explain the statement with an example? Also, check whether my understanding of the example is correct. "If using the same unit fixed costs at different output levels, managers may reach erroneous conclusions. Total fixed costs should be used." My Understanding: For example, if the capacity is 1000 and currently we produce 1000 units and sell it for $20 per unit, variable cost $5 and the fixed cost $10 per unit (within the relevant range); and we have a special order to produce 1200 units for $8 per unit. Should we include additional the Total Fixed Cost of $10000, which is (10*1000) for the range (1001-2000) plus $10000 for the range (0-1000), which means, we will have a total fixed cost of $20000.Vijay