Homework Answers
Answer:
| Do Nothing | Haley Chipana | Dan gillespie | |
| SP | 75 | 75 | 60 |
| VC | 45 | 45 | 45 |
| Contribution | 30 | 30 | 15 |
| Estimated sales unit | 800,000 | 1,200,000 | 2,000,000 |
| Total contribution | 24,000,000 | 36,000,000 | 30,000,000 |
| Production Costs | 9,000,000 | 9,000,000 | 9,000,000 |
| Advertising Costs | 15,000,000 | 20,000,000 | 15,000,000 |
| Profitability | - | 7,000,000 | 6,000,000 |
BY our analysis we find that Haley Chipana's idea is more profitable as compared to Dan Gillespie idea Hence, we should follow her advice.
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Read Case 11-3. Choose the best strategy and justify your
decision based on appropriate accounting principles.
We were unable to transcribe this imageHaley: I think we need to think of some way to increase our profitability. Do you have any ideas? Dam: Well, I think the best strategy would be to become aggressive on price. Haley: How aggressive? Dam: If we drop the price to $60 per unit and maintain our advertising budget at $15,000,000, 1 think we will generate...
Please explain as well.
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