Question

In: Operations Management

Your company will continue to sell its current product: the LifeSaver I. Your boss has asked...

Your company will continue to sell its current product: the LifeSaver I. Your boss has asked you to assess the impact of cannibalization on the company's projected total contribution margin. The LifeSaver I is priced at $48 and has unit variable costs of $28. The LifeSaver II will be priced at $39 and will carry unit variable costs of $24. First year LifeSaver II sales are projected at 375,000 units. The company had expected to sell 450,000 LifeSaver I alarms, without the introduction of LifeSaver II. While difficult to estimate, the company believes that about 200,000 LifeSaver I's will be cannibalized by the introduction of the LifeSaver II.

Calculate the reduced 2013 total contribution margin for LifeSaver I, assuming that LifeSaver II is introduced.

Solutions

Expert Solution

Hi,

Please find the answer as below.

If you like the answer, please up vote. It will encourage me to contribute more.

Answer

Reduced contribution margin for Life Saver-I = $ 5,000,000.

Refer calculation as below.

keosha answered 5 months ago
Next > < Previous

Related Solutions

Your boss has asked you to analyze a potential new product, and to recommend if the...
Your boss has asked you to analyze a potential new product, and to recommend if the company should produce and sell the product. Specifically, your boss wants you to prepare a spreadsheet that shows the free cash flows the product would generate, and shows what the product’s net present value and internal rate of return are and what your recommendation is. Marketing information Your company already has spent $125,000 to conduct market research about the demand for the product, which...
Your boss has asked you to analyze a potential new product, and to recommend if the...
Your boss has asked you to analyze a potential new product, and to recommend if the company should produce and sell the product. Specifically, your boss wants you to prepare a spreadsheet that shows the free cash flows the product would generate and shows what the product's net present value and internal rate of return are and what your recommendation is. Marketing information Your company already has spent $125,000 to conduct market research about the demand for the product, which...
Your boss has asked for your assistance regarding the company’s investments. One of their current investments...
Your boss has asked for your assistance regarding the company’s investments. One of their current investments has $10 million invested in long-term corporate bonds. This bond portfolio's expected annual rate of return is 9%, and the annual standard deviation is 10%. An external firm was contacted to see if the company could improve their return. Their recommendation has the company invested in an index fund that closely tracks the Standard & Poor's 500 Index. The index has an expected return...
Your company cafeteria has become a source of employee complaints. Your boss has asked you to...
Your company cafeteria has become a source of employee complaints. Your boss has asked you to conduct a survey of the staff’s feelings of the cafeteria and write a report based on the results, including recommendations for improvements if necessary. Use your imagination to fill in the details.
General Instructions: For this case, the CFO of ABC Company, your boss, has asked you to...
General Instructions: For this case, the CFO of ABC Company, your boss, has asked you to follow up on a buzz phrase – outsourced product development. The CFO wants you to research the topic and provide a summary of what you found out. Complete and submit the assignment by 23:59 EST Wednesday. Then review the second post instructions. Post your final response by 23:59 EST Sunday. Detailed Instructions: You are the Controller for ABC Company, which makes and sells products....
you have taken a job with a local manufacturing company. Your boss has asked you to...
you have taken a job with a local manufacturing company. Your boss has asked you to analyze a potential new product, and to recommend if the company should produce and sell the product. Specifically, your boss wants you to prepare a spreadsheet that shows the free cash flows the product would generate, and shows what the product’s net present value and internal rate of return are and what your recommendation is (see Table 12.1 in the textbook). Marketing information Your...
It is April 9, 2020, and your boss has asked your opinion on the asset allocation...
It is April 9, 2020, and your boss has asked your opinion on the asset allocation associated with the “Vanguard Target Retirement 2030 Fund.” This is a life cycle fund for investors with about 10 years to retirement (born between 1963 and 1967). The fund’s current asset allocation is:                Vanguard Total Stock Market Index Fund Investor Shares                         40.50% Vanguard Total International Stock Index Fund Investor Shares 27.00% Vanguard Total Bond Market II Index Fund Investor Shares† 22.70% Vanguard Total...
Problem 1.2 Product Pricing Your boss asked you for the per unit price of a new...
Problem 1.2 Product Pricing Your boss asked you for the per unit price of a new product at 200 units and at 400 units given that: Material Cost is linear from $25/unit for 100 units to $20/unit for 600 units Labor Hours are 2.2 hours/unit for 100 to 299 units and 2.0 hours/unit for 300 to 599 units Labor Rate is $15/hour Overhead is 120% of labor dollars Markup is 28% of COGS dollars.
Imagine that you work in the accounting department of a university and your boss has asked...
Imagine that you work in the accounting department of a university and your boss has asked you to explain components of revenue, expenses, and changes in net asset that are reported on the university’s statement of revenues. Respond to the following in a minimum of 175 words: Discuss at least two unique situations or transactions that you may encounter. Describe any circumstances the entity may engage in activities that result in Unrelated Business Income Tax (UBIT).
Imagine that you work in the accounting department of a university and your boss has asked...
Imagine that you work in the accounting department of a university and your boss has asked you to explain components of revenue, expenses, and changes in net asset that are reported on the university’s statement of revenues. Respond to the following in a minimum of 175 words: Discuss at least two unique situations or transactions that you may encounter. Describe any circumstances the entity may engage in activities that result in Unrelated Business Income Tax (UBIT).
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT