Mark from Mark's Mowers wants to make some changes to his business. He has asked
each of his department managers (Production, Marketing and Sales ) to submit a plan for
growth to you the General Manager.
USE EXCEL**
Currently Mark is selling 500 lawn mowers a month at $240 each. His variable cost per
lawnmower is $175 each. His fixed cost per month are $ 25,000.
For purposes of this project assume that each scenario is within the relevant range (no larger space
is needed, no additional people will be needed and no additional fixed cost will be necessary.
Question 1. What is the current income / loss that Mark is incurring per month?
Question 2. What is Mark's current breakeven in units?
Question 3. What is Mark's current breakeven in dollars?
The Production Department is considering three different alternatives.
A. Switch to better raw materials which would increase Variable cost by 10% per unit. They believe
this would increase brand awareness and consequently increase unit sales by at least 12.5%
B. Switch to lower quality materials and become a "price conscience" distributer. The amount that the
Production department felt best was to decrease Variable cost by 25%. They believe that this would
likely reduce unit sales by no more than 20%.

C. Finally the Production Department thought a combination of lower quality materials reducing variable costs by 10% combined with a lower retail price of $195 per mower would increase unit sales by at least 25%. Question 4. How much money will Mark make in each of the separate situations? Question 5. Which of the scenarios is best and why?