As you know, we set target prices to maintain a gross margin on sales of 35 percent. On some products, such as our drivers, we have been able to achieve the target price. We have been able to achieve higher prices on our putters than a target 35 percent gross margin would dictate. But our wedges are a totally different story.

Our factory is among the most efficient in the world. I think that some foreign companies are dumping wedges in the U. S. market, driving down prices and unit sales. We’ve been reluctant to further cut our prices for fear of what this will do to our gross margins. Fortunately, we’ve been able to offset the decline in sales of wedges by significantly raising the price of our put-ters. We were pleasantly surprised when our customers readily accepted the price increases of our putters, and we haven’t experienced much reaction from our competitors on the putter price increases.

Required:
What advice would you offer JoeBell?

TAlil Ihna Galf Rusic Product Information Wedges 15,000 units in 3 runs 15,000 units in 5 shipments Drivers Patters 5,000 units in 10 runs 5,000 units in 20 shipments Production 10,000 units in t run 10,000 units in 1 shipment Shipments Selling prices: Target Actual $162.61 162.61 $134.09 125.96 $ 81.31 105.70 TAILE 2 Dyna Golf Production Information Drivers Wedges Patters Raw material 6 components $4 each $20 $5 each$30 S1 each $10 5 components 10 components Labor ($20/hr.) Setup labor Run labor Machine time 10 hrs per production run 1/2 hr per driver 1/4 hr per driver 10 hrs per production run 1/3 hr per wedge 1/3 hr per wedge 11 hrs per 1/4 hr per patter 1/2 hr per putter TABLE3 Dyna Colf Overhead Receiving department Engineering department Machining department Packing department Setup department $ 300,000 500,000 700,000 200,000 3,000 $1,703,000