HONORS ACCT 2332 ABC PROJECT
Read the case and answer the questions below
using the workspaces
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the spaces provided. Please handwrite your answers.
YOUR WEBCT USER ID ____________________________________________
Zeus Opticals is a specialist manufacturer of optical instruments. Zeus has recently
expanded its core product market of binoculars into making eyepieces for microscopes /
telescopes, and screw-on lenses for digital SLR cameras. The firm believes that it makes
little money selling binoculars and that these new markets have great profit potential.
Somewhat to Zeus’s surprise, it finds it tough to make money with eyepieces. As of now,
the firm is selling the product at a negative profit margin. Yet, Zeus faces intense price
pressure in this segment, and thinks that it might have to lower prices by 5% or more to
stay competitive. The market for binoculars has been stable for several years, and Zeus
expects the trends to continue for the near future. Zeus is most excited about entering the
market for screw-on lenses for digital SLR cameras. Although current volumes are small
(relatively), Zeus believes that there is substantial market potential for this product.
Leveraging its excellent reputation for optics and lenses, Zeus believes that it could reach
and sustain two times the current volume of this product. This strategy also seems to
make sense financially as this product looks like the most profitable of the three lines, per
the firm’s accounting records.