Question
In: Finance
Hyperion Inc., currently sells its latest high-speed color printer, the Hyper 500, for $ 343. It...
Hyperion Inc., currently sells its latest high-speed color printer, the Hyper 500, for $ 343. It plans to lower the price to $ 297 next year.
Its cost of goods sold for the Hyper 500 is $ 192 per unit, and this year's sales (at the current price of $ 343) are expected to be 2 800 units.
a. Suppose that if Hyperion drops the price to $ 297 immediately (rather than waiting one year) it can increase this year's sales by 24 % to 27 032 units. What would be the incremental impact on this year's EBIT of such a price drop?
The change in this years EBIT is _______?
b. Suppose that for each printer sold, Hyperion expects additional sales of $ 87 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin of 82 % on ink cartridges. What is the incremental impact on EBIT for the next three years of such a price drop?
The change in EBIT from ink cartriges will be ___________?
The change in EBIT year 1 is $____________?
The change in EBIT year 2 is $___________?
The change in EBIT year 3 is $__________?
Please answer all questions and show all work!
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $ 364. Its...
Hyperion Inc., currently sells its latest high-speed colour
printer, the Hyper 500, for $ 364. Its cost of goods sold for the
Hyper 500 is $ 208 per unit, and this year's sales (at the
current price of $ 364) are expected to be 23,000 units. Hyperion
plans to lower the price of the Hyper 500 to $ 312 one year from
now.
a. Suppose Hyperion considers dropping the price to $ 312
immediately, (rather than waiting one year). By...
Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $ 362. Its...
Hyperion Inc., currently sells its latest high-speed colour
printer, the Hyper 500, for $ 362. Its cost of goods sold for the
Hyper 500 is $ 207 per unit, and this year's sales (at the
current price of $ 362) are expected to be 17000 units. Hyperion
plans to lower the price of the Hyper 500 to $ 310 one year from
now. a. Suppose Hyperion considers dropping the price to $ 310
immediately, (rather than waiting one year). By...
Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $ 342. Its...
Hyperion Inc., currently sells its latest high-speed colour
printer, the Hyper 500, for $ 342. Its cost of goods sold for the
Hyper 500 is $ 195 per unit, and this year's sales (at the
current price of $ 342) are expected to be 19,000 units. Hyperion
plans to lower the price of the Hyper 500 to $ 293 one year from
now. a. Suppose Hyperion considers dropping the price to $ 293
immediately, (rather than waiting one year). By...
Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $ 362. Its...
Hyperion Inc., currently sells its latest high-speed colour
printer, the Hyper 500, for $ 362. Its cost of goods sold for the
Hyper 500 is $ 207 per unit, and this year's sales (at the
current price of $ 362) are expected to be 25 comma 000 units.
Hyperion plans to lower the price of the Hyper 500 to $ 310 one
year from now.
a. Suppose Hyperion considers dropping the price to $ 310
immediately, (rather than waiting one...
Hyperion Inc., currently sells its latest high-speed colour printer, the Hyper 500, for $363. Its cost...
Hyperion Inc., currently sells its latest high-speed colour
printer, the Hyper 500, for $363. Its cost of goods sold for the
Hyper 500 is $207 per unit, and this year's sales (at the
current price of $363) are expected to be 25,000 units. Hyperion
plans to lower the price of the Hyper 500 to $311 one year from
now
.a. Suppose Hyperion considers dropping the price to $311
immediately, (rather than waiting one year). By doing so it
expects to...
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Target Costing
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