For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently offer two core washer and dryer sets: a high-end model and an economic model. You are tasked to complete several calculations and present your findings to the company stakeholders. You may use any presentation software

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For this activity, you have been hired as a team of consultants on a multi-year basis for a global washer and dryer manufacturer. They currently offer two core washer and dryer sets: a high-end model and an economic model. You are tasked to complete several calculations and present your findings to the company stakeholders. You may use any presentation software (Google Slides, Prezi, PowerPoint, etc.) 

1.  For your first assignment, management has provided the following revenue and cost information:

 
 High-End Set Economical Set 
Sales price    $3,500 per unit    $1,000 per unit  
Labor   $875 per unit   $250 per unit
Materials   $1400 per unit   $300 per unit
     
Direct fixed costs    $25,000 per month   $16,500 per month
Allocated fixed costs    $85,000 per month   $85,000 per month

 

They want a better understanding of their business to make budgeting and sales goals decisions and have asked you to determine their:

 

  1. Break-even quantities for each product line
  2. Break-even quantities to earn $500,000 per year margin on the high-end line (at the current sales price)
  3. Break-even quantities to earn $300,000 per year margin on the economical line (at the current sales price)

 

They expect the product lines to fully absorb the costs allocated to them. 

Once you have determined these amounts, they have asked that you:

 

  • present the information
  • describe how you performed your calculations
  • and explain what the results mean

Related Book For  answer-question

Applied Corporate Finance

4th edition

Authors: Aswath Damodaran

ISBN: 978-1118808931