ACC 202 MOD 5 CA Essay Example | Topics and Well Written Essays - 500 words

ACC 202 MOD 5 CA - Essay ExampleAs the company has the capacity to fuck off 20,000 building blocks in a year, Paul Peco should focus on utilizing the firms maximum production capacity, as there is a high level of demand for the product.Pecos has the capacity to manufacture 20,000 building blocks per year without any sum up in the fixed costs. The most profitable solution for Paul Peco would be to sell 20,000 wholes in a year, so that the companys maximum capacity is utilized. From this volume, the contribution required from a single unit to cover the fixed costs can be computed (Weston and Copeland).The profit boundary line originally set by Paul Peco was a minimum of $ 10 per unit. In the revised plan, a minimum profit of $ 12.50 per unit is fixed. Hence the revised minimum selling price is at $ 280 per unit.It is evident that Paul Peco would have change 1,925 units in the last month. Assuming a constant demand every month, Paul Peco will easily be able to sell 20,000 units i n the first year. The last months contribution margin income statements for the two rules are presented below.From the revised plan, it is evident that Ms. Goodpersons decision to accept the contract at $290 per unit was profitable. Ms.Goodperson should be hired again. Also, based on the revised decision rule, Paul Peco should instruct his sales supply to accept orders at any price above $ 280 per