Engineering advised that the knife-gate valve

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Question 1) Jerry wants to know whether fixed costs are being allocated appropriately, and if not, he would like your suggestions for an improved allocation methodology, including how these changes would impact the financial statements under current production levels. Question 2) Jerry is also wondering if the current pricing strategy is appropriate. He would like you to consider the pricing of the current products and make any recommendations you might have. He advised you to meet with his employees since they have some thoughts in this area. Your meeting notes with key personnel are included in Appendix II. Question 3) Jerry is certain that a great way for CVC to improve profitability is to expand its product line. He believes a new knife-gate valve has a very promising future. CVC's CEO still needs to be convinced; while she would like to increase profits, there are capacity concerns. Jerry provided you with the following information on the knife-gate valve: In addition, engineering advised that the knife-gate valve can be produced on existing machinery. According to the engineers, manufacturing the knife-gate value should not result in any increased to fixed production costs. Only the allocation of fixed costs will change. Jerry would

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