Answer:
3.52
Explanation:
Calculation to determine the target cost per unit?
Using this formula
Target cost per unit=Projected sales -Desired profit /Projected units
Let plug in the formula
Target cost per unit=$300,000-$36,000/75,000 units
Target cost per unit=$264,000/75,000 units
Target cost per unit=3.52 per unit
Therefore the target cost per unit is 3.52
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Answer:
a. Marketopia has a comparative advantage in the production of pies.
Explanation:
The computation is shown below
As we know that the comparative advantage principle refers that the firm which has less opportunity cost in the production of a good should generate that specific good and specalize according to this
Now
for Marketopia
The opportunity cost of cookies is 18 by 30 pies = 0.6 pies
The opportunity cost of pies are 30 by 18 cookies = 1.67 cookies
For Ecolandia
The opportunity cost of cookies is 9 by 90 = 0.1 pies
The opportunity cost of pies is 90 by 9 = 10 cookies
We can see that Econlandia has the comparative advantage in cookies while on the other hand the marketopia has the comparative advantage in pies
Therefore the correct option is a.
Keep the product:
Sales $500,000Variable Expenses 340,000
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Contribution Margin 160,000
Fixed Manufacturing 220,000
Net operating income (60,000)
Drop the product:
Sales $0
Variable Expenses 0
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Contribution Margin 0
Fixed Manufacturing 180,000
Net operating income (180,000)
Difference of keep and drop the product would be:Sales ($500,000)
Variable Expenses 340,000
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Contribution Margin (160,000)
Fixed Manufacturing 40,000
Net operating income (20,000)
Therefore, net operating income would decrease by $20,000 if Product A were dropped.