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, strike, and emulation before you answer this question. Beauregard Textile Company (BTC) has been debating whether to increase the cost of Triaxx-30 fabrics to $4.00 from $3.00 per yard. Based on an analysis of costs and market demand, we preach that BTC keep the cost of the fabric at $3.00 per yard. This decision was swinish on an analysis of relevance costs of the fabric at specific quantities based on 2.5 grade historical sales volumes. Incremental costs include direct labor, and materials. As shown on a lower floor in Table 1, for years 1988 1989, total revenue negatively charged relevant costs ( some(prenominal) incremental and avoidable costs) turns out to be more profi dining table at the $3.00 price head word than at the higher price point because of the increased demand. If BTC decides to stay at the $4.00 per yard price point 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) embossed the price to $4.

00; this is still true even with the 20% wearing in demand due to the fabric not world available at $3.00 mentioned in the text ledger (see table 2). Even though this is the ideal case for BTC in ground of contribution margin, it is not realistic to assume that C&P will raise their price and it will grate demand for t he fabric. C&P is content on get unneuroti! c or beating whatever price BTC announces. This strategy has provided them with a sales volume higher than BTC the first two billet 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, musket ball club it on our website: BestEssayCheap.com

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