The scientists at Symbiotic Super Products, Inc. have developed a new product \"
ID: 2653924 • Letter: T
Question
The scientists at Symbiotic Super Products, Inc. have developed a new product "LX" that is expected to take some sales away from the present product "H". The marketing department has developed two sales quantity forecasts; one for the present "H" product only (product LX is not offered), and one for the sales of H and for LX, if the proposal is approved. The unit prices, and unit COGS for the two products are shown below. No changes in prices and costs will be made it the proposal is approved. Determine the Gross Margin only for each year that could be used in preparation of the evaluation of a proposal to introduce the LX product in addition to the H product. Sales Quantities Year 2016 2017 2018 2019 Product H only (no change) 1,000 1,000 1,000 750 Both products H and LX H 800 700 600 500 LX 250 750 1,500 2,000 H LX Sales price each $84 $59 COGS Each $51 $32 The scientists at Symbiotic Super Products, Inc. have developed a new product "LX" that is expected to take some sales away from the present product "H". The marketing department has developed two sales quantity forecasts; one for the present "H" product only (product LX is not offered), and one for the sales of H and for LX, if the proposal is approved. The unit prices, and unit COGS for the two products are shown below. No changes in prices and costs will be made it the proposal is approved. Determine the Gross Margin only for each year that could be used in preparation of the evaluation of a proposal to introduce the LX product in addition to the H product. Sales Quantities Year 2016 2017 2018 2019 Product H only (no change) 1,000 1,000 1,000 750 Both products H and LX H 800 700 600 500 LX 250 750 1,500 2,000 H LX Sales price each $84 $59 COGS Each $51 $32Explanation / Answer
Determine the Gross Margin only for each year that could be used in preparation of the evaluation of a proposal to introduce the LX product in addition to the H product.
Relevant Gross Margin that could be used in preparation of the evaluation of a proposal to introduce the LX product in addition to the H product is the Gross Margin Lapsed due to Introduction of Product LX, It is oppurtunity cost .
2016
Gross Margin Used in evaluation of a proposal to introduce the LX product = Unit lost of product h *(Sale Price -COGS)
Gross Margin Used in evaluation of a proposal to introduce the LX product = (1000-800)*(84-51)
Gross Margin Used in evaluation of a proposal to introduce the LX product = $ 6600
2017
Gross Margin Used in evaluation of a proposal to introduce the LX product = Unit lost of product h *(Sale Price -COGS)
Gross Margin Used in evaluation of a proposal to introduce the LX product = (1000-700)*(84-51)
Gross Margin Used in evaluation of a proposal to introduce the LX product = $ 9900
2018
Gross Margin Used in evaluation of a proposal to introduce the LX product = Unit lost of product h *(Sale Price -COGS)
Gross Margin Used in evaluation of a proposal to introduce the LX product = (1000-600)*(84-51)
Gross Margin Used in evaluation of a proposal to introduce the LX product = $ 13200
2019
Gross Margin Used in evaluation of a proposal to introduce the LX product = Unit lost of product h *(Sale Price -COGS)
Gross Margin Used in evaluation of a proposal to introduce the LX product = (750-500)*(84-51)
Gross Margin Used in evaluation of a proposal to introduce the LX product = $ 8250