0.

266667 prb notes qst

37499.53

37500
Prb ( case 4) Style inc : Five bispoke tailoring

Style inc product line variable coast and margin

Shirts suits
Particulars Classic premium coats Classic premium
Retail selling price $75.00 $95.00 $125.00 $475.00 $625.00
Tailoring cost $7.50 $9.25 $10.75 $25.50 $29.00
Shipping cost $48.50 $58.75 $69.25 $163.50 $186.00
Total variable cost/unit $56.00 $68.00 $80.00 $189.00 $215.00
Contribution /unit $19.00 $27.00 $45.00 $286.00 $410.00

Rate of variable cost 74.67% 71.58% 64.00% 39.79% 34.40%

Rate of contribution margin 25.33% 28.42% 36.00% 60.21% 65.60%

Annual contribution per clothing line

Shirts suits
PARTICULARS Classic premium coats Classic premium
Annual targeted sales 600000 600000 600000 600000 600000
% of product line 5% 15% 15% 15% 15%
Salaes of the product line 30000 90000 90000 90000 90000
Rate of contribution margin 25.33% 28.42% 36.00% 60.21% 65.60%
contribution of he product line 7599 25578 32400 54189 59040

Price incresing option

Partiulars Existing Incresed
Price 75 100 Maximum w ca raise upto 100 cuz the comp
Variable cost 56 56
Contribution / unit 19 44
Contribution rate 25.33% 44.00% By dropping this product they are losing 750
Sales of the product line 30000 30000
contribution of he product line

RE distribution of remaining lines

shirts Suits
Particular Classic premium coats Classic premium
Projected annual sales 600000 600000 600000 600000 600000
Drop of classic shirts share
Remaining annual sales
Annual sales of product line
Weightage of the product line
Selling price / unit
contribution / unit
Break even anaysis without classic shirts
Total weighted average
Particulars amt ( hint given : go with the weighted aaverage)
Weighted average selling price /uit 0
Weighted average contribution / unit 0
Weighted average pv ratio (Contribution ratio)

Loss contribution from classic shirts

Total managerial cost
Breakeven salaes required
 suits
executive
$850.00
$33.10
$211.90
$245.00
$605.00

28.82%
71.18%

suits
executive
600000
25%
150000
71.18%
106770

m w ca raise upto 100 cuz the competator is selling at 100 if we increase more than 100 customer will go towards the compitator

ng this product they are losing 7500

uits
executive
600000
the weighted aaverage)
ards the compitator