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: Standard Glutton Free Volume (units) 2,000 4,000 Sales Revenue $4,000 $11,200 Variable Costs 3,000 8,000 Prof H has suggested a plan to reduce costs by $1,400 a month. Before agreeing, Prof Y would like to know what change in volume would be required to provide the same level of improvement as the cost reduction plan. a) To match the profit improvement of a $1,400 cost reduction, what would the volume have to be assuming no change in product mix? Volume would have to be Standard and Glutton Free. b) Assuming total volume remains at 6,000 units, what change in product mix would be required to increase profits by $450 vs. the original situation? Units Standard Glutton Free 6,000 Total Units
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