Brewery Ipana Oy has found some potential long-time partners in the restaurant business. To optimize the supply chain, the company is negotiating for contracts that would allow all production in the coming years to be sold to these partners. The contracts aim to shift production to 20 liter barrels of beer, which would become the sole product of Ipana Oy. In case the negotiations are successful, Ipana Oy estimates its typical year would look as follows: the quantity shipped to the customer is 18000 units at a price of 300 €/unit. The gross profit percentage is 40 % and the yearly fixed costs are 1500000 €. (Additional text: The variable cost per unit [€/unit] for products that would be produced in the scenario above is 180 [€/unit].) Question:  Calculate the critical sales price in the estimate [€/product].

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
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Brewery Ipana Oy has found some potential long-time partners in the restaurant business. To optimize the supply chain, the company is negotiating for contracts that would allow all production in the coming years to be sold to these partners. The contracts aim to shift production to 20 liter barrels of beer, which would become the sole product of Ipana Oy.

In case the negotiations are successful, Ipana Oy estimates its typical year would look as follows: the quantity shipped to the customer is 18000 units at a price of 300 €/unit. The gross profit percentage is 40 % and the yearly fixed costs are 1500000 €.

(Additional text: The variable cost per unit [€/unit] for products that would be produced in the scenario above is 180 [€/unit].)

Question:  Calculate the critical sales price in the estimate [€/product].

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