Question

A company is able to implement one of two strategies regarding a particular? product: hire a...

A company is able to implement one of two strategies regarding a particular? product: hire a marketing firm to increase sales 18?% or assign a product procurement manager who can reduce material cost for the product by 5?%.?Currently, the product has sales of ?$10,700,000. The costs of materials are $7,700,000, labor costs are? $1,450,000 and overhead costs are $800,000. What are the effects on net income of the two alternative? strategies?

The change in net income after the 18% increase in sales is?

The change in net income due to the reduction in material costs is?

Based on the change in net? income, the company should ?

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Answer #1

In view of higher change percentage the option 2 should be selected that is the company should appoint a manager who reduces the material cost by 5%

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