btc case solution (1)
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btcTRANSCRIPT
Sheet1Case Solution Beauregard Textile CompanyRelevant Costs for BTCProduction Volume250005000075000100000125000150000175000200000Direct Labour0.860.830.80.780.760.740.760.8Material0.40.40.40.40.40.40.40.4Spoilage0.0420.040.040.040.0380.0380.0380.04Dept Direct Exp0.1980.140.120.1120.10.10.10.1Total Relevant Cost (Per Unit)1.51.411.361.3321.2981.2781.2981.34SalesPossible ScenariosBTCC&PA. Current - BTC: $4; C&P: $375000150000B. Competitive - BTC: $3; C&P: $3125000100000C. Collusive - BTC: $4; C&P: $410000080000(20% Reduction in demand for both the entities)Scenario Analysis (A)BTCC&PIndustrySelling Price43Relevant Cost (Per Unit)1.361.278Incremental Contribution2.641.722Total Contribution198000258300456300Scenario Analysis (B)BTCC&PIndustrySelling Price33Relevant Cost (Per Unit)1.2981.332Incremental Contribution1.7021.668Total Contribution212750166800379550Scenario Analysis (C)BTCC&PIndustrySelling Price44Relevant Cost (Per Unit)1.3321.36Incremental Contribution2.6682.64Total Contribution266800211200478000