Question

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Provide a narrative analysis in Word FOR QUESTION 4-6. Your narrative analysis should summarize the results of your analysis and make recommendations for the benefit of the company.

Question 4: Based on profit-maximization analysis, what level of output should you recommend to the CEO?

Units	200	250	300	350	400
Sales Price	$70,000	$66,000	$64,000	$59,000	$52,000
Variable Cost	$60,000	$54,000	$48,000	$46,000	$45,000
Contribution	$10,000	$12,000	$16,000	$13,000	$7,000
Total Profit	$2,000,000	$3,000,000	$4,800,000	$4,550,000	$2,800,000

Question 5: Using the above information, prepare a budget for May 20X8, stating the total cost. Use a spreadsheet to display your data and calculations.

	Apr		May
Production–Units of MiniY	3000 per unit		3200 per unit
Components cost (variable)	$24,000,000	8000 24M/3000	$25,600,000	24M*3200/3000
Labor cost (variable)	$13,500,000	4500 13.5M/3000	$14,400,000	13.5M*3200/3000
Rent (fixed)	$6,000,000	Fixed	$6,000,000
Depreciation (fixed)	$6,000,000	Fixed	$6,000,000
Other (fixed)	$2,000,000	Fixed	$2,000,000
Total	$51,500,000	$12,500	$54,000,000

Question 6: With the costs that you calculate, what is the profit or loss associated with MiniY? NOTE: Assume that the variable and fixed costs mentioned in Step 5 are also applicable to Step 6 when calculating the profit or loss for MiniY

Joint Cost	MiniY	MiniX	Total
Sales Unit	3200	3000
Sales Price	$25,000	$27,100
Sales Value (sales unit*sles price)	$80,000,000	$81,300,000	$161,300,000
Allocation Rate (sales value/sales value total)	49.60%	50.40%	100%
Joint Cost	$3,000,000.00
Relative Sale Value (3,000,000*Allocation Rate)	$1,487,910.73	$1,512,089.27
Profit/Loss (sales value-Relative Sale Value)	$78,512,089.27	$79,787,910.73

Expert Answer

Answer 1