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Dillon Inc. produces three models of a certain product: Standard, Deluxe, and Super. Relevant data: Standard...

Dillon Inc. produces three models of a certain product: Standard, Deluxe, and Super. Relevant data:
Standard Deluxe Super
Sales in units 12,000 5,000 3,000
Price per unit 85 120 166
Variable cost per unit 34 45 84
Fixed costs are $1,000,000.
a) Compute Dillon Inc. breakeven point in sales dollars with the current sales mix.
b) Compute Dillon Inc. current margin of safety.
c) What is forecast net income at sales of $2,400,000 given the current sales mix?
d) Marketing Department has proposed a sales promotion costing $40,000 with a focus on one model only.
Depending on which model is chosen, the promotion is expected to increase sales of Standard by 11%, Deluxe by 15%, or Super by 20%.
Should the campaign be approved, and if so, which model should it promote? Explain, with relevant calculations.

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ekkarill92 answered 1 year ago
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