Problem $12-220$ points

Kingman Inc is considering expanding their business. They plan to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for trade show are expected to be $$300,000.$ The booth will be open Kingman Inc also plans to add a new product line, Triples, which will have a variable cost of Kingman Inc will continue to sell the existing product, Doubles, which will have a variable cost of Kingman Inc believes that the salesperson will spend approximately:

$45$

$$225$

$$1,125$

$15$

$30$

hours during trade shows per package per package hours selling Doubles and hours selling Triples

Assume that the fixed costs will be allocated based on selling hours for each product.

Hint: Calculate fixed cost rate per hour so you can spread fixed costs to each product

Required

Determine the estimated total cost $($including fixed and variable costs$)$ and cost per unit of each product, assuming that the salesperson is able to sell $120$ units of Doubles salesperson is able to sell $75$ units of Triples

Determine the estimated total cost $($including fixed and variable costs$)$ and cost per unit of each product, assuming that the salesperson is able to sell $300$ units of Doubles salesperson is able to sell $150$ units of Triples

Explain why the cost per unit figures calculated in Requirement $1$ are different from the amounts calculated in Requirement $2.$ Also explain how the differences in estimated cost per unit will affect pricing decisions.