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Solve.docx - Vortec Inc LESS LESS OPTION 1 OPTION 2 CURREN...

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Vortec Inc OPTION 1 OPTION 2 OPTION 1 OPTION 2 CURREN T C.P.U PROPOSED C.P.U CURRENT QTY PROPOSED QTY 100000 102000 SALES 5 4 500000 508000 LESS: VARIABLE 4.5 4.5 450000 459000 CONTIBUTION 0.5 -0.5 50000 49000 (LOSS) P.V. RATIO 10% (NEGATIVE) LESS: FIXED 27500 27500 PROFIT 22500 21500 AVERAGE C.P.U 4.775 4.770 -1000 LOSS DUE TO ADD. ON FOR 2 1. Should Vortec reject the Medsupplies offer because the $4/unit offered is less than average costs of $4.47? W not? SUGGESTION: Considering the profitability ratio of Vortex co., going with additional 2000 qty may not be a wise decision Though it has opportinuity to optimizes the fixed cost and still has positive consolidated margin of safety,
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