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Finding the Advantage of Reducing Variable Production Costs

An advanced company estimates that spending $29,750 in employee training will result in reducing variable production costs by 6% and increasing sales by 12.5%. Production and sales amount to 4,400 units, selling price is $200 per unit and total production cost is $150-60% of which is variable cost. What is the advantage of this project?

Solution Preview

Current Total Profit = 4400 x (200 - 150) = $220,000

New Units sold = 4400 x (1+12.5%) = 4950

New Variable cost = 150 x ...

Solution Summary

In just under 100 words, this solution presents the calculations which need to be made in order to properly evaluate the project in question. Overall, a couple of overall advantages are listed.

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