Reference no: EM133399993

The difference in operational profits may be attributed to the increased level of specificity and clarity in the ABC analysis. Insight into the sources of revenue and costs may be gained by analyzing this data. Based on the results of the ABC study, the Standard boxes bring in the greatest revenue, while the Deluxe boxes have a negative cash flow. The increased depreciation and upkeep of the Deluxe boxes is likely to blame for this. If LGI wants to increase its earnings, it has to devise a strategy for controlling the expenses associated with the Deluxe editions of its products. With its detailed and precise information, the ABC method is the perfect tool for making this kind of choice.

The sustainability manger is concerned about the Anti-Deluxe Action group's impact on the company and suggested that materials and process of making the Deluxe Boxes should be changed. As the process of making the Sustainable Deluxe Boxes, will be less intensive, a suggestion is made that the selling price for the Sustainable Deluxe Boxes could be $23 per unit. Discuss whether changing the price to $23 is a viable option for LGI? Provide evidence from the Excel workbook,