What if Style Inc. instead decided to increase the selling price of the product line with the
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Question:
What if Style Inc. instead decided to increase the selling price of the product line with the lowest total contribution margin?
a. Assuming total revenue (and the revenue sales mix) is unaffected by the price increase, what price would they have to charge in order to meet the target contribution margin of $25,000?
b. Do you think this price is feasible? Why/why not?
Fixed costs $78/sqft in rental expense for a 400 sqft storage
Revenue = 600k
Dress shirt product lines | ||||
Classic | Premium | Executive | ||
Retail SP | $ 75.00 | $ 95.00 | $ 125.00 | |
% of Total Sales | 5% | 15% | 15% | |
Tailoring Costs | $ 7.50 | $ 9.25 | $ 10.75 | |
Shipping Costs | $ 48.50 | $ 58.75 | $ 69.25 | |
Suit product lines | ||||
Coat | Classic | Premium | Executive | |
Retail SP | $ 395.00 | $ 475.00 | $ 625.00 | $ 850.00 |
% of Total Sales | 10% | 15% | 15% | 25% |
Tailoring Costs | $ 28.35 | $ 25.50 | $ 29.00 | $ 33.10 |
Shipping Costs | $ 181.75 | $ 163.50 | $ 186.00 | $ 211.90 |
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ISBN: 9780730302414
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Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver
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