BTC Case Solution (1)
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Case Solution Beauregard Textile Company Relevant Costs for BTC Production Volume 25000 50000 75000 100000 125000 Direct Labour 0.86 0.83 0.8 0.78 0.76 Material 0.4 0.4 0.4 0.4 0.4 Spoilage 0.042 0.04 0.04 0.04 0.038 Dept Direct Exp 0.198 0.14 0.12 0.112 0.1 Total Relevant Cost (Per Unit) 1.5 1.41 1.36 1.332 1.298 Sales Possible Scenarios BTC C&P A. Current - BTC: $4; C&P: $3 75000 150000 B. Competitive - BTC: $3; C&P: 125000 100000 C. Collusive - BTC: $4; C&P: $ 100000 80000 (20% Reduction in demand f Scenario Analysis (A) BTC C&P Industry Selling Price 4 3 Relevant Cost (Per Unit) 1.36 1.278 Incremental Contribution 2.64 1.722 Total Contribution 198000 258300 456300
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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
