Elmwood, Inc. currently sells 12,200 units of its product per year for $102 each. Variable costs...

 

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Elmwood, Inc. currently sells 12,200 units of its product per year for $102 each. Variable costs total $77 per unit. Elmwood's manager believes that if a new machine is leased for $161,650 per year, modifications can be made to the product that will increase its retail value. These modifications will increase variable costs by $19.00 per unit, but Elmwood is hoping to sell the modified units for $132 each. a-1. Should Elmwood modify the units or sell them as is? Sell as is Sell with modifications a-2. How much will the decision affect profit? Amount b. What is the least Elmwood could charge for the modified units to make it worthwhile to modify them? (Round your answer to 2 decimal places.) Minimum Selling Price c. The leasing company is willing to negotiate the price of the machine lease. What is the most Elmwood would be willing to pay to lease the machine if they plan to charge $132 for the modified units? Maximum Amount Elmwood, Inc. currently sells 12,200 units of its product per year for $102 each. Variable costs total $77 per unit. Elmwood's manager believes that if a new machine is leased for $161,650 per year, modifications can be made to the product that will increase its retail value. These modifications will increase variable costs by $19.00 per unit, but Elmwood is hoping to sell the modified units for $132 each. a-1. Should Elmwood modify the units or sell them as is? Sell as is Sell with modifications a-2. How much will the decision affect profit? Amount b. What is the least Elmwood could charge for the modified units to make it worthwhile to modify them? (Round your answer to 2 decimal places.) Minimum Selling Price c. The leasing company is willing to negotiate the price of the machine lease. What is the most Elmwood would be willing to pay to lease the machine if they plan to charge $132 for the modified units? Maximum Amount

Answer rating: 100% (QA)

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