Question

Refer to William’s Steel Parts in E7- 44B. William feels like he’s in a giant squeeze play: The automotive manufacturers are demanding lower prices, and the steel producers have in-creased raw material costs. William’s contribution margin has shrunk to 50% of revenues. William’s monthly operating income, prior to these pressures, was $ 196,000.

Requirements
1. To maintain this same level of profit, what sales volume (in sales revenue) must William now achieve?
2. William believes that his monthly sales revenue will only go as high as $ 1,020,000. He is thinking about moving operations overseas to cut fixed costs. If monthly sales are $ 1,020,000, by how much will he need to cut fixed costs to maintain his prior profit level of $ 196,000 per month?



$1.99
Sales1
Views115
Comments0
  • CreatedAugust 27, 2014
  • Files Included
Post your question
5000