RSM322H1 Study Guide - Quiz Guide: Variable Cost, Gross Margin, Contribution Margin
Document Summary
Bw manufacturing case solution analysis and appendices: Richardson picked option 2: lower price of grill c and is now wondering if the bottom line could have been lower. The company"s needs to reassess the effect of different project proposals on profitability in order to identify the best course of action. Bw manufacturing is a small player in a medium-sized industry and as such must use a. The status quo would be to keep the current product mix, which includes the decision to lower grill c price for 2009. Exhibit 2 (standard cost per product) shows that grill c had the highest profit margin at per unit. Lowering the price and the increase in volume sales results in a ,000 loss as seen in appendix 1. Actual operating results in exhibit 3 were ,452,750 higher than expected, indicating that we should reply on product profitability to base decisions on product mix and price changes.
