Eprecision

I: Issues on the study

• Whether to sell market series B Products or sell as is series A products.

• If series B will be sold, what would be the price to be set?

II: Basis for the alternatives

• Our group decides to use all the assumptions discussed in the case study.

III: Summary of Assumptions

• Series A Sales projections versus Actual Sales last FY

• Series A and B Projected Sales Comparison

• Incremental Variable Cost

• Additional Non Recurring Cost

• Decrease in incremental demand if current price will increase by $5.

• Decrease in incremental demand if current price will increase by $10.

IV: Summary of alternatives

Based on the above assumption, we came up with the following options.

Segmental contribution margin of the above options is presented in exhibit A.

V: Recommendation

Given all the assumptions in the case, it is better for the company to market Series B segment. The primary reason is that the market for these products is growing. The problem encountered by the company is lost in market share for 1020 and 1010 products because both are in its declining stage. This dilemma can be addressed by gaining the lost opportunity by developing the product.

The company should apply the price under Option C because this will give the highest income among the options. Also, the target market is willing to pay for any price as manifested in the demand of product 1030 in which its feature is applied in product 1020 and 1010.

*Sales in units and unit price are presented in exhibit B. ** Variable Production Cost is presented in Exhibit C.

• Option A and B – Sales is based on the Current FY sales projection and current sales price. Variable production cost is computed based on the policy of the company. Cost for product 1030 is unchanged.

• Option C – Sales is based on the Current FY projection and sales unit price is set...