BI https://www.math ud nayes MGMT 273 Fall Quiz: Chapter 9 Quiz Submit Qutz This
ID: 2790276 • Letter: B
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BI https://www.math ud nayes MGMT 273 Fall Quiz: Chapter 9 Quiz Submit Qutz This Question: 1 pt This Quiz: 13 pts possible e: colour printer, the Hyper 500, for $342. Its cost of goods sold for the Hyper 500 is $195 per unit, and this year's sales (at the current price of $342) are expected to be 21,000 units. h plans to lower the price of the Hyper 500 to $293 one year from now hisyear's sales by 28% to b. Suppose that for each printer sold. Hyperion expects additional sales of $80 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross profit margin o 67% on ink cartridges. What is the incremental impact on EBIT for the next three years of dropping the price immediately (rather than waiting one 26,880 units. What would be the incremental impact on this year's EBIT of such a price drop? The change in EBIT will be s Round to the nearest dollak) b. Suppose that for each printer sold Hyperion expects additional sales of S80 per year on ink cartridges for the three-year life of the printer, and Hyperion has a gross pro it margin of 6 % on ink cartridges what is the incremental impact on EBIT f the ned three years of d opp g the prce mmediately ather than waiting one year)? The incremental changein EBIT for the frst year is (Round to the nearest dollar) The incremental change in EBIT for the second year is Round to the nearest dollar) The incremental change in EBIT for the third year is Sr . (Round to the nearest dollar) in eExplanation / Answer
a.) Earlier Sales Projection = 21,000 units
New Sales Projection with lowered Price = 26,880 units
Earlier Unit Price =$342
New Reduced Unit Price =$293
Cost of Goods Sold per Unit =$195
Change in EBIT = Change in Sales Revenue
= 293x26,880 - 342x21,000
= 7,875,840 - 7,182,000
= $693,840
b.) Additional Revenue from Sales of Ink Cartridges =$80/year
Printer Life = 3 years
Gross Profit Margin on Ink Cartridges =67%
Change in EBIT from Ink Cartridge Sales = Change in Cartridge Sales
= (26,880 - 21,000) x 80 x 0.67 per year
= 5,880 x 80 x 0.67 per year
= 315,168 per year
Incremental EBIT for the first year is =$693,840 + $315,168 =$1,009,008
Incremental EBIT for the second year is =$315,168 = $315,168
Incremental EBIT for the third year is =$315,168 = $315,168
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