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  • Berkshire Threaded Fasteners

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    Venkatesh Gopal
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    Company's profit if it had dropped 300 series 300 series (in 000s) Retain Drop Variable Labor 349 Raw Material 404 Power 15 Repairs 5 Total 773 Fixed Selling Expense General Admin Rent Other Fact Costs Depreciation Interest Total Total Cost Unit Sales sales Contribution Margin profit profit from series 1 and series 2 Total Profit for firm Hence dropping series 300 is not advisable Whether to lower the price of series 100 from $2. To $2. Lowering prices will increase the volume from 7

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    Company's profit if it had dropped 300 series 300 series (in 000s) Retain Drop Variable Labor 349 Raw Material 404 Power 15 Repairs 5 Total 773 Fixed Selling Expense General Admin Rent Other Fact Costs Depreciation Interest Total Total Cost Unit Sales sales Contribution Margin profit profit from series 1 and series 2 Total Profit for firm Hence dropping series 300 is not advisable Whether to lower the price of series 100 from $2. To $2. Lowering prices will increase the volume from 7

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
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    1K views3 pages

    Berkshire Threaded Fasteners

    Uploaded by

    Venkatesh Gopal
    Company's profit if it had dropped 300 series 300 series (in 000s) Retain Drop Variable Labor 349 Raw Material 404 Power 15 Repairs 5 Total 773 Fixed Selling Expense General Admin Rent Other Fact Costs Depreciation Interest Total Total Cost Unit Sales sales Contribution Margin profit profit from series 1 and series 2 Total Profit for firm Hence dropping series 300 is not advisable Whether to lower the price of series 100 from $2. To $2. Lowering prices will increase the volume from 7

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 3

    Company's profit if it had dropped 300 Series

    300 Series (in 000s)


    Retain
    Drop
    Variable
    Labor
    349
    Raw Material
    404
    Power
    15
    Repairs
    5
    Total
    773

    0
    0
    0
    0
    0

    Fixed
    Selling Expense
    General Admin
    Rent
    Other Fact Costs
    Depreciation
    Interest
    Total

    Total Cost
    Unit Sales
    Sales
    Contribution Margin
    Profit
    Profit from Series 1 and Series 2
    Total Profit for firm

    239
    90
    95
    56
    186
    27
    693

    239
    90
    95
    56
    186
    27
    693

    1466
    501276
    1355
    582
    -111

    693
    0
    0
    0
    -693

    35
    -76

    35
    -658

    Hence dropping series 300 is not advisable

    Whether to lower the price of series 100 from $2.45 to $2.25


    Lowering prices will increase the volume from 750,000 to 1,000,000
    Seling Price
    2.42
    2.25
    Unit Sales
    750,000
    1,000,000
    Total Sales
    1815000
    2250000
    Variable Cost per unit sales (100 pcs)
    Labor
    Raw Material
    Power
    Repairs
    Total

    0.61
    0.63
    0.01
    0.01
    1.26

    0.61
    0.63
    0.01
    0.01
    1.26

    Variable Cost
    Contribution

    945000
    870000

    1260000
    990000

    426000
    161000
    88000
    65000
    264000
    25000
    1029000

    426000
    161000
    88000
    65000
    264000
    25000
    1029000

    Fixed Cost per unit sales (100 pcs)


    Total
    1.372

    1.029

    Fixed Cost
    Selling Expense
    General Admin
    Rent
    Other Fact Costs
    Depreciation
    Interest
    Total

    Total Cost per unit sales


    Profit

    2.632
    -0.212

    Hence, to reduce prices is a good option

    2.289
    -0.039

    Most Profitable Product Line


    Selling Price per unit sales

    100 Series 200 Series 300 Series


    2.42
    2.52
    2.7

    Variable Costs per unit sales ( 100 pcs)


    Labor
    Raw Materials
    Power
    Repairs
    Total Variable Cost
    Total Contribution Margin

    0.61
    0.59
    0.7
    0.63
    0.75
    0.81
    0.01
    0.02
    0.03
    0.01
    0.01
    0.01
    1.26
    1.37
    1.55
    2,494,000 1,174,000 1,145,000

    Fixed Costs
    Rent
    Depreciation
    Other Factory Cost
    Selling Expense
    General Admin
    Interest
    Allocated fixed cost
    Fixed Cost per unit sales (100 pcs)
    Contribution Margin per 100 piece lot
    Contribution Margin Ratio
    Profit(loss) per unit sales ( 100 pcs)

    88,000
    109,000
    95,000
    264,000
    296,000
    186,000
    65,000
    76,000
    56,000
    426,000
    317,000
    239,000
    161,000
    90,000
    90,000
    25,000
    28,000
    27,000
    1,029,000
    916,000
    693,000
    1.032
    1.286
    1.382
    1.16
    1.15
    1.15
    0.4793388 0.4563492 0.4259259
    0.128
    -0.136
    -0.232

    Hence, 100 Series is the most profitable one

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