Fle Edit View History Bookmarks People Window Help @??82%.0 Thu 7:04 PM Q @ ?Acc
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Fle Edit View History Bookmarks People Window Help @??82%.0 Thu 7:04 PM Q @ ?Accourtng 2033-035 . Micro , D ch 7 HW * narks Question 510119) Ext Submt 061 points The Rosa model of Mohave Corp. is cuently manfactured as a very plain umbreila with no decoration The company is considering changing this product to a much mone decorative model by adding a silk-screened design and embellishments A summary of the expected costs and revenues for Mohave's two options follows 15.000 un 13.00 $ 24.00 Esimated sales price S 9.50 Variabie manufacturing ovenead dditional developme Required 1 Determine the increase or decrease in proft if Mohave sells the Rosa Umbrella with the additional decorations 8 9 command option commandExplanation / Answer
1 Rosa umbrella Decorated Umbrella Incremenral sales revenue(13/ 24 x Q) $ 195,000 $ 360,000 $ 165,000 variable cost(11.5 / 18) x Q 172,500 270,000 97,500 contribution margin 22,500 90,000 67,500 additional development cost 15,000 15,000 differential profit $ 22,500 $ 75,000 $ 52,500 (7.5+2.5+1.5 = 11.5; 9.5+5+3.5 = 18) 2 Should Mohave add decorations to the Rosa umbrella? Yes 3 Rosa Umbrella Decorated Umbrella Incremental sales revenue $ 195,000 $ 312,000 $ 117,000 variable cost 172,500 234,000 61,500 contribution marginal 22,500 78,000 55,500 additional development cost 15,000 15,000 differential profit $ 22,500 $ 63,000 $ 40,500 3-b. Should Mohave add decorations to the Rosa umbrella? Yes Note: please ask in comment, if further help is needed, Thanks
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