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Question 1 .total fixed cost (TFC) = fixed cost per units = ( $660
+ $770) x 3.000 = 4290000
contribution margin per unit = unit price - unit variable cost = $4350-
$2070= 2280
before
price after price
reduction reduction diffrence
price 4.350 3.850 500
quantity 3.000 3.500 500
revenue 13.050.000 13.475.000 425.000
variable
manufacturing cost 5.385.000 6.282.500 897.500
variable marketing
cost 825.000 962.500 137.500
contribution margins 6.840.000 6.230.000 610.000
fixed manufacturing 1.980.000 1.980.000 -
fixeed marketing cost 2.310.000 2.310.000 -
income 2.550.000 1.940.000 610.000
recomendation : loweing price reduces incomes . Other factors , such as thereduction available
capacity and the capacity impact on market share ,could affect decision
question 3 ; impact if thr company will accept the goverment contrct have on march income
with goverment
without goverment contract
impact contract reguler goverment total diffrence
revenue 17.400.000 15.225.000 1.420.000 16.645.000 755.000
variable manufacturing
cost 7.180.000 6.282.500 897.500 7.180.000
variable marketing costs 1.100.000 962.500 - 962.500 137.500
question no 6 . The price equivalent to in-house cost of production and the accepance of the $2.475
per unit proposal from outside contractor based on the quotation received .
all
production 1000 units
in-house contracted
revenue $13.050.000 13.050.000
variable manufacturing costs 5.385.000 3.590.000
variable marketing cost 825.000 770000
payement contractor
income 2550000 4994000
x= $4994000 - 2.550.000 = $ 2.444.000/1000
units
question 4 the minimum unit price the company should consider if enter on the foreign market
minimum price = variable manufacturing cost + shipping cost + order cost
$1795 + $410 +
(22000/1000) 2227
recomendation = the maximum unite price is $ 2.444 , therefore , the $2475 purchase price is not
acceptable , it would decrease income by $31000 [(2475-2444)*1000]
question 7 the maximum purchase price per unit should wiliing to pay the outside contractor and
the acceptance of the $2475 per unit
contract 1000 regular host and produce 800
3000 regular hoist Modified Hoists total
product- regular
inhouse (in) regular out modified
revenue 13.050.000 8.700.000 4.350.000 3.960.000 17.010.000
variable
manufacturing cost 5.385.000 3.590.000 2.420.000 6.010.000
variable marketing
costs 825.000 550.000 220.000 440.000 1.210.000
contribution
marketing 6.840.000 4.580.000 4.130.000 1.100.000 9.790.000
fixed
manufacturing cost 1.980.000 1.980.000
fixed marketing
cost 2.310.000 2.310.000
payment
contractor 2.550.000 x
TOTAL 5.500.000