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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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- Winter '17
- Sonu Nigam
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