Beauregard

Should Beauregard Textile Company (BTC) announce a impairment of $3.00 or $4.00 per yard for Triaxx-30? Make sure that you do analysis of costs, assume, and inhalation before you answer this question. Beauregard Textile Company (BTC) has been debating whether to increase the disbursal of Triaxx-30 fabrics to $4.00 from $3.00 per yard. Based on an analysis of costs and market demand, we vaticinate that BTC keep the cost of the fabric at $3.00 per yard. This decision was handbag on an analysis of relevance costs of the fabric at specific quantities based on 2.5 grade historical gross revenue volumes. Incremental costs include direct labor, and materials. As shown below in Table 1, for categorys 1988 1989, total revenue damaging relevant costs ( some(prenominal) incremental and avoidable costs) turns out to be more profi panel at the $3.00 set aim than at the higher price point because of the increased demand. If BTC decides to stay at the $4.00 per yard price poin t that they have been employing during the first 2 canton of 1990 then their contribution margin will non be as high (see table 1). One provoke point is that the highest contribution margin for BTC will result when both BTC and Calhoun & Pritchard (C&P) elevated the price to $4.

00; this is still true even with the 20% wearing away in demand due to the fabric not creation available at $3.00 mentioned in the text ledger (see table 2). Even though this is the ideal case for BTC in wrong of contribution margin, it is not realistic to assume that C&P will raise their price and it will grate demand for the fabric. C&P is content on ge t unitedly or beating whatever price BTC an! nounces. This strategy has provided them with a sales volume higher than BTC the first two canton for 1990 and it has allowed them to have constant volume sales year all over year from 1988 to 1989 and higher volume year over year from 1989 to 1990. Additionally, Calhoun also tested the water by raising their price to $4.00 in the 4th quarter of 1988 resulting in a 75% decline in...If you want to get a full essay, earth club it on our website: BestEssayCheap.com

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