Orca Company is a large manufacturer of optical storage systems based in British Columbia. Its practical annual
Question:
Required
1. Compute Orca's selling price.
2. Recent competition from abroad has caused a drop in budgeted production and sales volume to 6,000 units per year, and analysts are predicting further declines. If Orca continues to use budgeted production as the denominator level, calculate its new selling price.
3. Comment on the effect that changes in budgeted production have on selling price. Suggest another denominator level that Orca might use for its pricing decision. Justify your choice.
4. Orca has received an offer to buy identical storage units for $400 each instead of manufacturing the units in-house. Shutting down the manufacturing plant would reduce fixed costs to $450,000 per year. At what level of expected annual sales (in units) should Orca accept this offer? Explain your answer.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham
Question Posted: