Reference no: EM132778355

The yellow bicycle manufactures a number of bicycles. yellow daisy is one of yellow co. products that sells for 180 euro per unit. total costs related to this product are 270000 per month and variable expenses involved in manufacturing this product are 126 euro per unit. Monthly sales are 8000 yellow daisy bicycles.

Show all calculations and explain your reasoning

Problem a) compute the break even point for this product in euros and units

Problem b) according to a market research conducted by the marketing department, a 10% reduction in sales price will result in 25% increase in unit sales. Compare the two scenario in terms of contribution margin and operating income. The current scenario: using the current price and the proposed scenario: one using proposed price (10% below the current sales price). Do you think what the marketing department is proposing is a good idea? Why or why not

Problem c) compute the number of yellow daisy bicycles to be sold to earn an operating income of 189000 euros per month (use the original, current situation data, not the proposed scenario)