Question: Professors Y & H are contemplating potential actions to improve the results of their snack business. Results from a recent representative month are shown below:

Professors Y & H are contemplating potential actions to improve the results of their snack business. Results from a recent representative month are shown below: Volume (units) Sales Revenue Variable Costs Fiber Bars 2,000 $2,000 1,500 Energy Gum 1,000 $1,600 1,500 Prof H has suggested a plan to reduce costs by 20%. Before agreeing, Prof Y would like to know what change in volume would be required to provide the same level of improvement as the 20% cost reduction. To match the profit improvement of a 20% cost reduction, what would the volume have to be assuminano change in product mix? a) Volume would have to be Fiber Bars and Energy Gum. b) Assuming total volume remains at 3,000 units, what change in product mix would be required to increase profits by $75 vs. the original situation? Units Fiber bars Units Energy gum 3,000 Total Units
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