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Largo Global Inc.
Largo Global Inc.
If Largo Global Inc. decides to sell the Sustainable Deluxe Boxes at the price the CEO demands to maintain the same profit percentage as for Standard Boxes do you think the new price calculated in Tab 4 is a viable option? Why is it important for LGI to know what their Breakeven quantity is? Also indicate which other (non-numerical information) should be considered when deciding to pursue the Sustainable Deluxe Box option.
Standard Boxes | Sustainable Deluxe Boxes | Total | |
Quantity | 108.00 | 18.00 | 126.00 |
Selling price per unit | $ 18.80 | $ 23.00 | |
Revenue | $ 2,030.40 | $ 414.00 | $ 2,444.40 |
Subtract: Variable Costs | $ 1,080.00 | $ 198.00 | $ 1,278.00 |
Equals: Contribution Margin | $ 950.40 | $ 216.00 | $ 1,166.40 |
Subtract: Fixed Costs | $ 16.84 | $ 83.50 | $ 100.34 |
Equals: Profit | $ 933.56 | $ 132.50 | $ 1,066.06 |
Profit % (based on revenue) | 45.98% | 32.01% | 77.98% |