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Problem:

Assume your marketing people have a great plan to boost the unit sales. Unit sales rise to 500,000, but the plan requires your firm to drop the price to $29,000/unit and the marketing will cost your firm $300 million total. This $300 million is on top of the firm's original $5 billion fixed costs. Your firm still has $18,000 variable cost per unit. Your initial projection for profits before the marketing plan was to break even ($0 profits).

Required:

Question: What is your new projection for profits?

Note: Provide support for rationale.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173016

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