Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached
Question:
In looking over the 2012 sales figures, Audio-2-Go's sales budgeting team recalled the following:
a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 30 percent. The number of units of Model A-1 to be sold was forecast to be 50 percent of 2012 units.
b. Model A-5 was introduced on November 1, 2012. It contains a built-in 20 GB hard drive and can be synchronized with several popular music software programs. Audio-2-Go brought out this model to match competitors' audio players, but the price is so much higher than other Audio-2-Go products, that sales have been disappointing. The company plans to discontinue this model on June 30, 2013, and thinks that 2013 monthly sales will remain at the 2012 level if the sales price remains at the 2012 level.
c. Audio-2-Go plans to introduce Model A-6 on July 1, 2013. It will be a high-end player that will be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is $180; unit sales are estimated to equal 2,500 per month.
d. A competitor has announced plans to introduce an improved version ofModel A-3. Audio-2-Go believes that theModelA-3 pricemust be cut 20 percent tomaintain unit sales at the 2012 level.
e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining constant.
Required:
Prepare a sales forecast by product and in total for Audio-2-Go, Inc., for 2013.
Step by Step Answer:
Cornerstones of Cost Management
ISBN: 978-1111824402
2nd edition
Authors: Don R. Hansen, Maryanne M. Mowen