The following data is for Archery Unlimited, a maker of bows used by archery enthusiasts. All fixed costs are...
The following data is for Archery Unlimited, a maker of bows
used by archery enthusiasts. All fixed costs are
unavoidable regardless of the products offered, and Archery sells
all the products it produces each year.
|
Beginner |
Intermediate |
Advanced |
|
| Unit Selling price |
$50 |
$200 |
$400 |
| Unit variable cost |
$40 |
$ 80 |
$120 |
| Total fixed cost |
$50,000 |
$200,000 |
$245,000 |
| Annual volume |
8,000 |
4,000 |
3,000 |
Required:
(1) Perform
differential analysis to determine what will happen to total
profits if the company drops the Beginner product.
(2) Based on the analysis, what would be your recommendation to
management regarding dropping of the Beginner product?
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The following data is for Archery Unlimited, a maker of bows used by archery enthusiasts. All fixed costs are...
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