Erickson Corporation manufactures two different coffee makers, Professional for commercial use and Home for family use. Vincent
Question:
The market price for coffee makers comparable to Professional is $58 and to Home is $18. The companys administrative expenses amount to $125,000.
Required
Round your figures to two decimal points.
a. Compute the cost per unit for both products.
b. Determine the companys profit or loss.
c. Justin Wang, the marketing manager, recommends that the company implement a focused marketing strategy. He argues that advertisements in trade journals would be more effective for the commercial market than on TV. In addition, the cost of journal ads would be only $21,000. He also proposes sending discount coupons to targeted households to reach a broad market base. The coupons program would cost $72,000. Compute the new cost of each product, assuming that Mr. Erickson replaces TV advertising with Mr. Wangs suggestions.
d. Determine the companys profit or loss using the information in Requirementc.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old