- 4.12 Octagon Company is considering introducing a new video camera. Its selling price s projected to be P1,000 per unit. Variable manufacturing costs are estimated to be P450 per unit The company expects the annual fixed manufacturing costs for the new camera to be P3,500,000 per year if its annual sales do not exceed the current regular shift capacity of 12,000 cameras and. P6,000,000 otherwise. Sales commissions are paid at 5% of sales. The company also plans to spend P1,000,000 per year on advertising. 000.08 aleo) enirbsm lsurmLA Instructions: 000,81 1. Determine the contribution margin per unit. 2. Determine the two break even points in terms of number of cameras sold per month. 3. Suppose a market research survey indicates that a 10% reduction in the selling price wil lead to a 20% increase in sales. Should the company reduce the price by 10%? Fobcoru coar ber po

Hit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls are a hit, the firm expects to be able to sell 42,700 units a year at a price of $64 each. If the new product is a bust, only 22,200 units can be sold at a price of $41. The variable cost of each ball is $27 and fixed costs are zero. The cost of the manufacturing equipment is $5.92 million, and the project life is estimated at 9 years. The firm will use straight-line depreciation over the 9-year life of the project. The firm's tax rate is 35% and the discount rate is 13%. Now suppose that Hit or Miss Sports can expand production if the project is successful. By paying its workers overtime, it can increase production by 20,100 units; the variable cost of each ball will be higher, equal to $32 per unit. By how much does this option to expand production increase the NPV of the project? Assume that the firm decides whether to expand production after it learns the first-year sales results. (Round…

A maker of mechanical systems can reduce product recalls by 25% if it purchases new packaging equipment. The cost of the new equipment is expected to be $40,000 four years from now. How much could the company afford to spend now, instead of 4 years from now, if it uses a minimum attractive rate of return of 12% per year?

quick computing currently sells 7 million computer chips each year at a price of $12 per chip. It is about to introduce a new chip, and it forecasts annual sales of 22 million of these improved chips at a price of $15 each.  However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 1 million per year.  The old chips cost $6 each to manufacture, and the new ones will cost $10 each.  What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?