Should the company reduce the price and why

Assignment Help Financial Accounting
Reference no: EM132912751

Aussie Skateboards Ltd provides the data below relating to its single product for 2021:

Selling price per skateboard $180
Annual fixed manufacturing costs $620,400
Annual fixed non-manufacturing costs $260,000
Variable manufacturing costs per skateboard $100
Variable selling costs per skateboard $18
Annual sales volume expected in 2021: 18,000 skateboards

Problem a) From the data provided by Aussie Skateboards Ltd for 2021, if the company decreases the price to $170 it is estimated the annual sales volume would increase to 20,000 skateboards per year. Should the company reduce the price? Why? (show all your calculations to justify your answer)

Problem b) The production capacity of Aussie Skateboards Ltd is 24,000 skateboards per year. The company received an offer from Sport Supplies Ltd to purchase from Aussie Skateboards an additional 5,000 skateboards in 2021 at $110 per skateboard. Aussie Skateboards would not incur any selling costs for this order but it would have to hire a supervisor only for this special order at a cost of $30,000. Should Aussie Skateboards accept this order? Why? (show all your calculations to justify your answer)

Reference no: EM132912751

Questions Cloud

Effective transformational leader : Personal Profiling: Do your capabilities suggest you could be an effective transformational leader - reflect on the qualities of leadership
Calculate the breakeven point in units and sales dollars : Calculate the breakeven point in units and sales dollars. Prepare a contribution margin income statement for 2021, for 18,000 skateboards sold
Living with chronic pain and suffering : Americans are living longer than ever before, living with chronic pain and suffering that might not, at least for some, make that life worth living.
Provide the journal entries required on December : Provide the journal entries required on December 1, 2020 to record the purchase of parts from the Brazilian supplier and the purchase of the call option
Should the company reduce the price and why : From the data provided by Aussie Skateboards Ltd for 2021, if the company decreases the price to $170. Should the company reduce the price? Why?
Discuss the relevance of diary of martha ballard : Describe and discuss the relevance of the Diary of Martha Ballard, based upon the PBS American Experience Episode you watched for this module
Analyse and report the significance of the results : Personal Profiling: Do your capabilities suggest you could be an effective transformational leader - Compare transactional and transformational leadership model
How many insurable hours would be recorded : Simon earns a fixed salary of $950.00 per week. During month-end he worked an extra 3 hours of unpaid time. How many insurable hours would be recorded?
Psychoeducational program for parents of dysfunctional : Discuss the strengths and weaknesses of the parent education program "A Psychoeducational Program for Parents of Dysfunctional Backgrounds"

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd