Information on Guadalupe Ltd.'s three products follows Required Determine the effect each of the following situations would have on monthly profits. Each situation should be evaluated independently of all others.

a. Product A is discontinued.

b. Product A is discontinued, and the subsequent loss of customers causes sales of Product B to decline by 100 units.

c. The selling price of A is increased to $5.50 with a sales decrease of 200 units.

d. The price of Product B is increased to $8.00 with a resulting sales decrease of 200 units. However, some of these customers shift to Product A; sales of Product A increase by 100 units.

e. Product A is discontinued, and the plant in which A was produced is used to produce D, a new product. Product D has a unit contribution margin of $0.30. Monthly sales of Product D are predicted to be 700 units.

f. The selling price of Product C is increased to $5.00, and the selling price of Product B is decreased to $7.00. Sales of C decline by 200 units, while sales of B increase by 300 units.  

Answer rating: 100% (QA)

Answer a Product A is discontinued The effect of this on Guadalupe Ltds monthly profits would be a decrease in profits since Product A is being discontinued and sales of the product would therefore de... View the full answer