Fa several product lines based on the age range of the target market. MSI sells
ID: 2570763 • Letter: F
Question
Fa several product lines based on the age range of the target market. MSI sells both and sells computer games. The company has such as steering wheels, electronic tablets, and hand controls. To date, MSI has developed and manufactured all the CDs itself as well as the of computers and the incorporation of computer activities into junior high and elementary school curriculums has led to a significant increase in sales to younger children. MSI has always included games for younger MSI has determined that elimination of children but now wants to expand its business to capitalize on changes in the Industry. g foced overhead cum to the re The company currenty has excess capacity and is investigating several possible ways to improve profitability.Explanation / Answer
1.
Revenue=$38,000
Cost savings if POP is dropped:
=Variable costs+direct fixed costs
=$34000+$3600
=$37,600
Revenue loss if POP is dropped=revnue-cost savings
=$38,000-$37600
=$400
2.
No. Should not eliminated as there exist the revenue loss of $400.
3.a
Revenue=$38,000
Cost savings if POP is dropped:
=Variable costs+direct fixed costs+Avoidable fixed cost
=$34000+$3600+$1200
=$38,800
Revenue gain if POP is dropped=revnue-cost savings
=$38,000-$38,800
=(800)
3.b.
Yes. Should eliminate as there exist the revenue gain of $800.
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