Abc Company Essay

The price increase must be enough to cover the additional fixed cost, so we just need to know what that fixed cost is per copy sold. This equals the additional fixed costs / number of copies sold.

The change in the contribution margin for all the products is responsible for the change in profitability.

8.20 equals $ 86,700. The contribution margin per unit at a retail price of Cr. 6.85 equal 1.95. The required volume will be the result of dividing the profit impact on the contribution margin per unit.

13. If the selling price is $22 per unit, what is the contribution margin per unit sold?

Only the incremental costs and benefits are relevant. In particular, only the variable manufacturing overhead and the cost of the special tool are relevant overhead costs in this situation. The other manufacturing overhead costs are fixed and are not affected by the decision.

• Cost would increase to $600/wafer, which would cut our gross profit by 35%. The cost calculations are given in Exhibit 1.

Consider a product line with 50% gross margins (after subtracting volume-related expenses from prices). The cost for handling an individual customer order is SEK 750, and the extra cost to handle a production order for a non-stocked item is SEK 2,250.

Because each product has a different contribution margin percentage, the volume required for each break-even point would be different and will not add up to the company’s overall break-even volume of 1,100,000 units; the overall break-even volume assumes that there is only one contribution margin percentage which is :

In order to meet customer demands for higher product quality, to comply with federally-mandated environmental regulations, and to reduce production costs, HCC must spend $2,000,000 within the next three years to upgrade equipment. The upgrade is expected to result in production efficiencies that will lower material and labor costs by reducing defective products, process waste, in-process inventory, and production man-hours through simplified work processes. It has been over a decade since significant modifications were made to the production facilities. Those changes were mostly technical in nature and did not substantially alter work processes or reduce overall employment. The average productivity gain in the industry for the past five years has been 3% per year. Financing for the loan to purchase the equipment

The implementation of the integrated aquasnap, will increase at a slightly greater rate each year, and will allow Carrier to earn about $8.6 million dollars more in 2002 alone, and $22.5 million more from 1997 to 2002. Also mass production will lower the overall cost of manufacturing due to various factors (i.e. cost of materials, number of parts, number of operations, assembly time, assembly cost, selling price, and overall price will all be reduced). The share projections are a steady 14% until 1998. If the delay bleeds into 1999 the overall loss on that entire year would be $6.8 million, but the overall market share would still increase $15.7 million through 2002.

Using $8.50 as the variable cost provided at the bottom of the case study and using $39.95 as the retail selling price as compared to $23.97 as the wholesale selling price (60% of the retail price), ServiSoft will realize a contribution margin of $31.45 with the retail distribution channel versus $15.47 with the wholesale distribution channel.

Option 1 will cost $200,000 to implement in new assembly equipment, plus a large amount of time and other costs (including training, lost production time during changeover, management time, etc.). Nevertheless, these costs could be paid off in one or two years depending on what savings are assumed for quality improvement, and inventory reduction.

The Jung Corporation's production budget calls for the following number of units to be produced each quarter for next year:

What increase in absolute unit sales and dollar sales will be necessary to maintain the level of total contribution dollars if the price for each product is reduced by 10 percent?

As mentioned in the text, Bang & Olufsen A/S have to launch several new products. Give examples of fixed and variable costs by developing and selling a new product.