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[solution] » (Not a repeat question.) The New Product Development Team at Mattel Inc. has developed a new version


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(Not a repeat question.) The New Product Development Team at Mattel Inc. has developed a new version of the Barbie doll for the upcoming holiday season - "Holiday Barbie".  Their market research suggests that they can sell approximately 500,000 units of Holiday Barbie at a price of $13.50/unit to retail stores.  The variable production costs are $4.50/unit and total fixed costs are expected to be $3,600,000.  In order for the new design to enter production, the target profit on the new doll must equal 30% each year on Mattel's capital investment.  The total required investment is $3,600,000.

If the number of units sold and selling price per unit cannot be increased beyond the current projection, to what level does variable cost per unit (currently $4.50) need to be reduced in order to ensure the 30% return on capital?  (Ignore minor rounding.) pick one

 $0.36
 $4.14
 $3.84
 Some other number.
 Cannot be computed from information provided.

 


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Solution #00020425

[solution] » (Not a repeat question.) The New Product Development Team at Mattel Inc. has developed a new version.zip

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This paper was answered on 21-Sep-2019

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