Molly Jasper and her sister, Caitlin Peters, got into the novelties business almost by accident. Molly, a talented sculptor, often made little figurines as gifts for friends. Occasionally, she and Caitlin would set up a booth at a crafts fair and sell a few of the figurines along with jewelry that Caitlin made. Little by little, demand for the figurines, now called Mollycaits, grew, and the sisters began to reproduce some of the favorites in resin, using molds of the originals. The day came when a buyer for a major department store offered them a contract to produce 1,480 figurines of various designs for $9,500. Molly and Caitlin realized that it was time to get down to business. To make bookkeeping simpler, Molly had priced all of the figurines at $7.69. Variable operating costs amounted to an average of $5.87 per unit. To produce the order, Molly and Caitlin would have to rent industrial facilities for a month, which would cost them $4,500

a. Calculate Mollycaits' operating breakeven point.
b. Calculate Mollycaits' EBIT on the department store order.
c. If Molly renegotiates the contract at a price of $9.51 per figurine, what will the EBIT be?
d. If the store refuses to pay more than $7.69 per unit but is willing to negotiate quantity, what quantity of figurines will result in an EBIT of $3,700?
e. At this time, Mollycaits come in 15 different varieties. Whereas the average variable cost per unit is $5.87, the actual cost varies from unit to unit.
f. What recommendation would you have for Molly and Caitlin with regard to pricing and/or the numbers and types of units that they offer for sale?

a. The computation of Mollycaits' operating break-even point is 2,473 units ($4,500/$1.82).

b. The calculation of Mollycaits' EBIT on the department store order is $812.40 ($9,500 - $8,688).

c. If department stores' price were $9.51, the EBIT will be $5,387 ($14,075 - $8,688).

Note that for (b) and (c), the fixed cost is not considered.

d. Without paying more than $7.69, the quantity that will result in an EBIT of $3,700 is 4,505 units ($4,500 + $3,700)/$1.82

e.  Varieties of Mollycaits = 15 with variable cost of $5.87

f. The recommendation to Molly and Caitlin with regard to pricing and varieties to offer is that, while the company can varieties to suit the needs of customers, it must ensure that it does not price them below $5.87, its operating cost.

Data and Calculations:

Special contract:

Units of figurines offered = 1,480

Sales value of offer = $9,500

Selling price per unit = $6.42 ($9,500/1,480)

Variable operating cost = $5.87

Contribution margin per unit = $0.55 ($6.42 - $5.97)

Normal business:

Estimated average price per unit = $7.69

Variable operating cost = $5.87

Contribution margin per unit based on average price = $1.82 ($7.69 - $5.87)

Fixed cost per month = $4,500

Thus, Molly and Caitlin can offer various types of figurine, but they must sell at least 2,473 units to break-even.

Learn more about computing break-even points here: https://brainly.com/question/9212451

QUESTION 7 of 10: What is an advantage of selling consumable items?
ОООО
a) They do not need refrigeration
b) They typically have a large profit margin
c) They are long-lasting
d) They tend to generate repeat business
Sulinit

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6.You now have the agreement with the company and will sign the contract as you and the company are satisfied with the contract agreement. Of course, this is will be your first step to build a strong relationship between you and your employer. Your manager will know more about you. This represent which of the negotiation process element?


A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship


7.You and the other party have either come to an agreement on the terms, or one party has decided that the final offer is unacceptable and therefore must be walked away from. Most negotiators assume that if their best offer has been rejected, there’s nothing left to do. You made your best offer and that’s the best you can do. This represent which of the negotiation process element?


A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship


8.Assemble the information you’ve gathered in a way that supports your position. You can present facts that show what you will contribute to the organization in the future, which in turn demonstrates your value. This represent which of the negotiation process element?


A- Gather information

B- Manage concessions

C- Manage time

D- Build the relationship

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a.
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b.
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c.
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d.
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