Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Computer Science Posted 28 Aug 2017 My Price 7.00

Straus Company

E7-17 Straus Company operates a small factory in which it manufactures two prod- ucts: A and B. Production and sales results for last year were as   follows:

   A           B      

Units sold                                  8,000         20,000 Selling price per unit                        $95                                                     $78 Variable costs per unit                              50                            45

Fixed costs per unit                      22                  22

For purposes of simplicity, the firm averages total fixed costs over the total number of units of A and B produced and   sold.

The research department has developed a new product (C) as a replacement for prod- uct B. Market studies show that Straus Company could sell 11,000 units of C next year at a price of $120; the variable costs per unit of C are $42. The introduction of product C will lead to a 10% increase in demand for product A and discontinuation of product B. If the company does not introduce the new product, it expects next year’s results to be the same as last year’s.

Instructions

Should Straus Company introduce product C next year? Explain why or why not. Show calculations to support your   decision.

Answers

Maurice Tutor
(5)
Status NEW Posted 28 Aug 2017 02:08 PM My Price 7.00

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