Sensitivity value of the variable costs

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Reference no: EM131070890

The president of Worldwide Gadgets would like to offer special, deeply discounted sale prices to Worldwide's most loyal and best customers under the following terms: 1. The prices will apply only to units purchased in excess of the quantity normally purchased by any given customer. 2. The units purchased must be paid for in cash at the time of sale - no credit terms to be offered. 3. The total quantity sold under these terms to all customers cannot exceed the excess capacity of the firm. 4. The net profit of the firm should not be negatively affected. 5. The prices will be in effect for ten days only. Given these conditions, the special sale price should be set equal to the marginal cost of materials only. average variable cost of materials only. marginal cost of all variable inputs. average cost of all variable inputs. sensitivity value of the variable costs.

Reference no: EM131070890

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