Assume that your R&D team has a new design for their product Able next round that can reduce their material cost of producing units from $8.59 to $7.73. They pass on half of all cost savings by cutting the current price to customers. For simplicity:
Use current labor cost of $8.37
Assume all period costs as reported on Andrews Income Statement for Asia Pacific (Annual Report Page 5) will remain the same.
Current price is equivalent to $30.00
Shipping cost to Asia Pacific is $2.50 per unit
Determine how many units (000's) of product Able would need to be sold in Asia Pacific alone next round to break even on the product.
Possible answers:
- 357 units
- 297 units
- 302 units
- 371 units
- 386 units