Assignment
Length: 3 to 4 pages.
You are an economist for the Vanda-Laye Corporation, which produces and distributes outdoor cooking supplies. The company has come under new ownership and management and will be undergoing changes in its product lines and operating structure. As an economist, your responsibilities include examining the market factors that affect success or failure of a product, including the supply and demand for the product, market conditions, and the behavior of competitors with similar products.
The new owners are evaluating the operating structure, and you have two possible alternatives. One alternative requires a high level of investment in fixed costs compared to the other alternative. Jorge, your supervisor, has assigned you the task of evaluating the two alternatives.
Assume that the company has no debt. Regardless of the alternative selected, market conditions will require the selling price of the product to be $3.45 per unit. The details for each alternative are given in the table.
Alternative 1 Alternative 2
Variable Cost $2.20 $2.70
Fixed Cost $80,000 $30,000
Total Assets $350,000 $350,000
Task:
Jorge has asked you to provide detailed responses to the following questions:
1. Analyze how the CVP analysis helps management in the planning stage of a new business.
2. What is the break-even quantity for each of the investment alternatives?
3. Analyze the breakeven differences between the two alternatives. What does the breakeven quantity tell you?
4. Which alternative would you recommend to the company? Explain the pros and cons of each alternative and the reasons for your selection.
Format your assignment according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the assignment, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.
Attachment:- CP-Prophit.rar