Project one is worth 80 points. Your submission should be well documented (you must show your work).

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. Currently, Mark is selling 400 lawn mowers a month at $250 each. His variable cost per lawnmower is $140 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.

1. 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 15%

2. 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 20%. They believe that this would likely reduce unit sales by no more than 20%.

3. Finally, the Production department thought a combination of lower quality materials 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?