In fact the equipment has no market value and is

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Unformatted text preview: 0,000 Gross Margin (200,000) Less: Selling & Administration (275,000) LOSS (475,000) They have no capacity constraint since the building is large and the equipment is low technology. In fact the equipment has no market value and is fully depreciated. The CEO has done a quick calculation and estimates the cost per unit at $24 ($1,200,000/ #50,000). “This is hopeless since I know I can’t raise the selling price. I could drop the selling price to $19 and I know we could get about #70,000 units in sales but how does that make sense when compared to the $24 cost?” You have been hired by the CEO to provide a recommendation for the upcoming year for Boulder Ltd. As the consultant to the CEO, thoughtfully respond to his concerns and ideas. Support your recommendation with calculations. Prepared by J. Kroeker, 2013 © Sauder School of Business, UBC Page 5 Question 3 (Boulder Limited) Respond to the CEO’s concerns. (20 marks) Prepared by J. Kroeker, 2013 © Sauder School of Business, UBC Page 6 Question #4 (12 marks) The Boeing 787 Dreamliner airplane has been grounded by the Aviation authorities due to safety concerns of the lithium-ion batteries. The 787 has an estimated 20% greater fuel efficiency compared to the other Boeing airplane models and thus, provides a greater distance of travel. This greater distance of travel can provide several thousand more kilometers on a given flight, for example from 12,000 to 15,000 kilometers. Since the 787‘s are now not permitted to fly, some airline companies who bought the 787 aircraft based upon the projected efficiencies are now adding up the “costs” of the fact the planes are “grounded”. Using concepts from class, discuss what possible costs these airlines could be referring to. Be specific in explaining these costs. Prepared by J. Kroeker, 2013 © Sauder School of...
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This document was uploaded on 03/09/2014 for the course COMM 354 at University of British Columbia.

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