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    Case Style Inc Fine Bespoke Tailoring

    Uploaded by

    Likith R
    1) The document discusses the product lines and costs for a clothing company called Style Inc. It provides details on the retail price, tailoring costs, shipping costs, and contribution margins for different clothing items like shirts, coats, and suits. 2) It calculates the annual contribution that each product line would make at different sales levels and market shares. It finds that dropping the classic shirt line would result in losing $7,500 in annual contribution. 3) To avoid losing this contribution, it considers increasing the price of classic shirts from $75 to $100. This would raise the contribution per unit from $19 to $44 while keeping costs the same.

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    Case Style Inc Fine Bespoke Tailoring

    Uploaded by

    Likith R
    651 views6 pages
    1) The document discusses the product lines and costs for a clothing company called Style Inc. It provides details on the retail price, tailoring costs, shipping costs, and contribution margins for different clothing items like shirts, coats, and suits. 2) It calculates the annual contribution that each product line would make at different sales levels and market shares. It finds that dropping the classic shirt line would result in losing $7,500 in annual contribution. 3) To avoid losing this contribution, it considers increasing the price of classic shirts from $75 to $100. This would raise the contribution per unit from $19 to $44 while keeping costs the same.

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    Case style inc fine bespoke tailoring

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    1) The document discusses the product lines and costs for a clothing company called Style Inc. It provides details on the retail price, tailoring costs, shipping costs, and contribution margins for different clothing items like shirts, coats, and suits. 2) It calculates the annual contribution that each product line would make at different sales levels and market shares. It finds that dropping the classic shirt line would result in losing $7,500 in annual contribution. 3) To avoid losing this contribution, it considers increasing the price of classic shirts from $75 to $100. This would raise the contribution per unit from $19 to $44 while keeping costs the same.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    651 views6 pages

    Case Style Inc Fine Bespoke Tailoring

    Uploaded by

    Likith R
    1) The document discusses the product lines and costs for a clothing company called Style Inc. It provides details on the retail price, tailoring costs, shipping costs, and contribution margins for different clothing items like shirts, coats, and suits. 2) It calculates the annual contribution that each product line would make at different sales levels and market shares. It finds that dropping the classic shirt line would result in losing $7,500 in annual contribution. 3) To avoid losing this contribution, it considers increasing the price of classic shirts from $75 to $100. This would raise the contribution per unit from $19 to $44 while keeping costs the same.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6
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    The document discusses a company called Style Inc that has different clothing product lines with varying costs, selling prices, and contribution margins. It analyzes the impact of increasing prices or dropping one product line.

    The company has five product lines: shirts, suits, classic premium coats, classic premium coats. It lists the retail price, tailoring cost, shipping cost, total variable cost, and contribution per unit for each.

    Dropping the classic shirts product line would result in a loss of contribution of $7,500. The company would need to redistribute sales targets across the remaining lines and recalculate the weighted average costs and contributions.

    0.

    266667 prb notes qst

    37499.53

    37500
    Prb ( case 4) Style inc : Five bispoke tailoring

    Style inc product line variable coast and margin

    Shirts suits
    Particulars Classic premium coats Classic premium
    Retail selling price $75.00 $95.00 $125.00 $475.00 $625.00
    Tailoring cost $7.50 $9.25 $10.75 $25.50 $29.00
    Shipping cost $48.50 $58.75 $69.25 $163.50 $186.00
    Total variable cost/unit $56.00 $68.00 $80.00 $189.00 $215.00
    Contribution /unit $19.00 $27.00 $45.00 $286.00 $410.00

    Rate of variable cost 74.67% 71.58% 64.00% 39.79% 34.40%


    Rate of contribution margin 25.33% 28.42% 36.00% 60.21% 65.60%

    Annual contribution per clothing line


    Shirts suits
    PARTICULARS Classic premium coats Classic premium
    Annual targeted sales 600000 600000 600000 600000 600000
    % of product line 5% 15% 15% 15% 15%
    Salaes of the product line 30000 90000 90000 90000 90000
    Rate of contribution margin 25.33% 28.42% 36.00% 60.21% 65.60%
    contribution of he product line 7599 25578 32400 54189 59040

    Price incresing option


    Partiulars Existing Incresed
    Price 75 100 Maximum w ca raise upto 100 cuz the comp
    Variable cost 56 56
    Contribution / unit 19 44
    Contribution rate 25.33% 44.00% By dropping this product they are losing 750
    Sales of the product line 30000 30000
    contribution of he product line

    RE distribution of remaining lines


    shirts Suits
    Particular Classic premium coats Classic premium
    Projected annual sales 600000 600000 600000 600000 600000
    Drop of classic shirts share
    Remaining annual sales
    Annual sales of product line
    Weightage of the product line
    Selling price / unit
    contribution / unit
    Break even anaysis without classic shirts
    Total weighted average
    Particulars amt ( hint given : go with the weighted aaverage)
    Weighted average selling price /uit 0
    Weighted average contribution / unit 0
    Weighted average pv ratio (Contribution ratio)

    Loss contribution from classic shirts


    Total managerial cost
    Breakeven salaes required
    suits
    executive
    $850.00
    $33.10
    $211.90
    $245.00
    $605.00

    28.82%
    71.18%

    suits
    executive
    600000
    25%
    150000
    71.18%
    106770

    m w ca raise upto 100 cuz the competator is selling at 100 if we increase more than 100 customer will go towards the compitator

    ng this product they are losing 7500

    uits
    executive
    600000
    the weighted aaverage)
    ards the compitator

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