What level of output should you recommend to the ceo

Reference no: EM131912705

Problem: Markup- pricing

Suppose IPS uses markup pricing for Android01. Fixed costs are $4.5 million, and for a level of production of 300 units, the variable cost-per-unit is $48,000.

Question 1: What is the price of the Android01 at 30% markup over full cost?

Choose the Profit Maximizing Output Level

The CEO's next question is, "What level of output would be required to maximize our profit on the Android01?" You have calculated the variable cost-per-unit for different levels of production. From market research, you have a schedule of prices for these levels. The information is summarized in the table below:

Number of Units	Variable cost per unit ($)	Sale Price per unit ($)
200	60,000	70,000
250	54,000	66,000
300	48,000	64,000
350	46,000	59,000
400	45,000	52,000

A recommendation on output could affect everyone in the company, from management to sales, to the floor manager and assembly line workers! You don't want to get this one wrong so you take some extra time to proof your calculations.

Question 2: Based on profit-maximization analysis, what level of output should you recommend to the CEO?

Budget Your CEO has asked you to prepare a production cost budget for the MiniY for May 20X8. The actual costs in April 20X8 were:

MiniY: Production Cost Budget

April 2018
Production-Units of MiniY	3,000
Components cost (variable)	24,000,000
Labor cost (variable)	13,500,000
Rent (fixed)	6,000,000
Depreciation (fixed)	6,000,000
Other (fixed)	2,000,000
TOTAL	51,500,000

For the month of May, the number of MiniY produced will increase to 3,200, reflecting an anticipated sales increase related to a new marketing campaign.

Question 3: Using the above information, prepare a budget for May 20X8 stating the total cost. Use a spreadsheet to display your data and calculations.Before starting your calculations, review materials on integrating accounting and financial information.Submit your Production Cost Budget Report and Calculations to the dropbox below. Be sure to show your calculations in Excel and provide a narrative analysis in PowerPoint. Your narrative analysis should summarize the results of your analysis and make recommendations for the benefit of company.

Reference no: EM131912705

Questions Cloud

Based on what she knows about fats : Based on what she knows about fats, which product most likely contains the most hydrogen atoms? Provide an explanation for this.

Explain why the given situation occurs : Explain why this situation occurs. Even if the balance sheet has errors, what implication does this have for the income statement?

Explain the concept of supply chain integration : Discuss the concept of supply chain integration. How does it result in better customer-related outcomes? Decide which distribution intensity level-intensive.

Look up the chemical formulas for bleach : Look up the chemical formulas for bleach, isopropyl alcohol, and Chlorhexidine gluconate (the active ingredient in Hibiclens).

What level of output should you recommend to the ceo : Prepare a production cost budget for the MiniY for May 20X8. What level of output should you recommend to the CEO?

Explain the implication for the original reported unit cost : Explain why the owners assumption that "total unit cost (including all appropriate resources) is proportional to direct materials cost" is not a safe assumption

Portfolio would likely suffer greatest increase in value : If the yield flattened, which portfolio would likely suffer the greatest increase in value/price? (ladder, bullet or barbell)? Explain.

Pertaining to mitosis and meiosis : How might the concepts pertaining to mitosis and meiosis be useful to you, or how can you apply this knowledge to your everyday life as a non-scientist?

Calculate the raw materials inventory : Total Manufacturing costs added to Work in Process Inventory during 2016 Assume Cost of Goods Manufacture is $500,000. What is Cost of Goods Sold for 2016

User Account

All Pages