New Hope Corporation manufactures replacement windshield wiper blades for the U.S. domestic market, and is recognized in the industry for quality and product design innovations. New Hope has just received a patent for a superior rubberized plastic wiper insert and wants you to help plan several strategic directions for manufacturing and distributing the new product.

Required:
1. Incremental material, labor, and variable overhead costs to produce and distribute the new blade insert total $0.073 per blade. Incremental fixed costs of production and distribution total $62,500 per month. Marketing research indicates that New Hope can raise the price of their new product by $0.37 per package of two-blade inserts. What would be the package breakeven sales for the new blade inserts? Round your answer up, to the nearest whole number.
2. Without prejudice to your answer to Part 1, assume the annual breakeven sales for the new blade is 276,000 packages. Calculate the incremental profit New Hope should earn with projected sales of 316,000 packages.
3. Assume once again the annual 276,000 package breakeven sales level referenced in Part 2. If sales are expected to range between 280,000 and 300,000 packages annually, what added information or refinement of information would you want before recommending production and distribution of the new wiper blades?

Question

New Hope Corporation manufactures replacement windshield wiper blades for the U.S. domestic market, and is recognized in the industry for quality and product design innovations. New Hope has just received a patent for a superior rubberized plastic wiper insert and wants you to help plan several strategic directions for manufacturing and distributing the new product.

Required:
1. Incremental material, labor, and variable overhead costs to produce and distribute the new blade insert total $0.073 per blade. Incremental fixed costs of production and distribution total $62,500 per month. Marketing research indicates that New Hope can raise the price of their new product by $0.37 per package of two-blade inserts. What would be the package breakeven sales for the new blade inserts? Round your answer up, to the nearest whole number. 
2. Without prejudice to your answer to Part 1, assume the annual breakeven sales for the new blade is 276,000 packages. Calculate the incremental profit New Hope should earn with projected sales of 316,000 packages.
3. Assume once again the annual 276,000 package breakeven sales level referenced in Part 2. If sales are expected to range between 280,000 and 300,000 packages annually, what added information or refinement of information would you want before recommending production and distribution of the new wiper blades?

Quizplus · Accepted Answer

The Answer of New Hope Corporation manufactures replacement windshield wiper blades for the U.S. domestic market, and is recognized in the industry for quality and product design innovations. New Hope has just received a patent for a superior rubberized plastic wiper insert and wants you to help plan several strategic directions for manufacturing and distributing the new product.

Required:
1. Incremental material, labor, and variable overhead costs to produce and distribute the new blade insert total $0.073 per blade. Incremental fixed costs of production and distribution total $62,500 per month. Marketing research indicates that New Hope can raise the price of their new product by $0.37 per package of two-blade inserts. What would be the package breakeven sales for the new blade inserts? Round your answer up, to the nearest whole number. 
2. Without prejudice to your answer to Part 1, assume the annual breakeven sales for the new blade is 276,000 packages. Calculate the incremental profit New Hope should earn with projected sales of 316,000 packages.
3. Assume once again the annual 276,000 package breakeven sales level referenced in Part 2. If sales are expected to range between 280,000 and 300,000 packages annually, what added information or refinement of information would you want before recommending production and distribution of the new wiper blades?

New Hope Corporation Manufactures Replacement Windshield Wiper Blades for the U.S