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A financial analyst studying two new distribution syatem basic and delux the basic system has unit level shipping cost of $8 per unit and annual facility cost of $500,000 in contrast the delux system has unit level shipping cost of $ 4 per unit and annual facility cost of $ 780,000 the delux system promise greater customer service the compny sells its product for $ 30 per unit less a 5 percent sales commission

A which of the two system will be more profiable if the sales are expected to average 50,000 units per year

B at what unit volum level will mangement be indifferent as to the profit for the basic system and delux syatem
c in A how much does the company value thepromised greater customer services ifit sales delux system ? how can the company verfiy this level of value.

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Accounting Basics, Accounting

Category:- Accounting Basics
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