Q1

Total Fixed Cost = Fixed Marketing Cost + Fixed Overhead Cost 4290000
Variable Cost per unit = Variable Man. Cost + Variable Mkt. Cost 2070
Selling Price per Unit 4350
Break Even Quantity Q
Therefore, 4350Q = 2070Q + 4290000
Q= 1881.5789473684
Break Even Sales 8184868.42105263

Q2
Before Price Reduction
Quantity 3000
Price 4350
Revenue 13050000
Variable Manufacturing Cost 5385000
Variable Markrting Cost 825000
Fixed Overhead Cost 1980000
Fixed Markeing Cost 2310000
Contribution Margin 6840000
Net Revenue 2550000

Q3
Difference
Quantitiy
Revenue -755000
Variable Man. Cost 0
Variable Mkt. Cost -137500
Contribution Margin -617500
Fixed Overhead Cost
Fixed Markeing Cost
Net Revenue -617500

Q4
Minimum Price = Var. Man. Cost + Shipping Cost + Order Cost 2227

Q5
Minimum Price = Var. Marketing Cost 275

Q6 Insource Production
Revenue 13050000
Variable Man. Cost 5385000
Variable Mkt. Cost 825000
Contribution Margin 6840000
Fixed Overhead Cost 1980000
 Fixed Markeing Cost 2310000
Net Revenue 2550000
Max Price to accept offer 2444

Q7 Insource Prod. Of 3000 units

Revenue 13050000
Var. Man. Cost 5385000
Var. Mkt. Cost 825000
Contribiution Margin 6840000
Fixed Overhead Cost 1980000
Fixed Mkt Cost 2310000
Net Revenue 2550000
Max Price to accept offer 2950

Analysis
Product is suited for market conditions but any unexpected
demand will be disadvatange to the company as it is not prepared
to handle the situation.Demand in domestic and international
market is rising.
After Price Reduction Difference
3500 500
3850 -500
13475000 425000
6282500 Since the net Income is decreased action
962500 Should not be taken
1980000
2310000
6230000
1940000 -610000

Without Govt. Contract With Govt. Contract + Regular Customers

4000 500 3500
17400000 1420000 15225000
7180000 897500 6282500
1100000 0 962500
9120000 522500 7980000
1980000 1980000
2310000 2310000
4830000 4212500

At This price the Differential cost will be just covered

Partial Outsourcing
13050000
3590000
770000 Should not outsource the production because
8690000 purchase cost is 2475
1386000
 2310000
4994000

Insource 2000 Reg. hoist Outsource 1000 Reg hoist Insource 800 modified hoist
8700000 4350000 3960000
3590000 0 2420000
550000 220000 440000
4560000 4130000 1100000

Should accept offer Since 2950 > 2475

 Govt offer Should be
rejected

tion because
Total
17010000
6010000
1210000
9790000
1980000
2310000
5500000