Athos and Porthos are divisions of Dumas, Inc., operating as profit centers. Both are profitable. One...

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Accounting

Athos and Porthos are divisions of Dumas, Inc., operating asprofit centers. Both are profitable. One of the products producedby Athos is A62, which normally sells for $180/unit. Cost is$125/unit (40% variable). Porthos is planning a new product, and istaking bids on one of the subassemblies. A62 would be appropriatefor this subassembly with some modification.
a) Discuss the factors Athos should consider when submitting abid.
b) If Athos does not submit the low bid, might Porthos stillbenefit from accepting their bid? Discuss briefly.

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3.8 Ratings (464 Votes)

Selling Price of A62 equals to 180 per unit The unit cost price of producing A62 is 125 out of which 40 is variable component ie 75 is fixed costs per unit and 50 is variable costs per unit a Major factors should be considered when submitting a bid for new product launch by Porthos Initial capital required to launch new product Launching the new product require sourcing of capital from various instruments including Equity and debt funds to buy assets and machinery to produce newly launched product Sourcing of capital required Athos should consider sourcing of funds when See Answer

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