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Global Fusion, a key customer of Upsilon, has forest that it would purchase 100,000 units of...

Global Fusion, a key customer of Upsilon, has forest that it would purchase 100,000 units of product from Upsilon next year. Upsilon budgeted $1,000,000.00 in fixed overhead expense to service the Global Fusion account. The Global Account was expected to yield these results: Unit sales 100,000- average project sales price $75- sales revenue 7,500,000-unit costs of goods sole 55-fixed expense 1,000,000-variable expense 10% agent commission.

** If Upsilon meets Global's demand and grants a 5% price discount, how will that contribution be afforded? (Quote the aggregate loss of customer contribution and not the loss per unit sold.)

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Forecast Units selling price Varaible costs costs of goods sold commission on sales 10% Total Variable Costs Contribution Margin 100,000 $ 75.00 $7,500,000 55.00 $ 7.50 $62.50 $12.50 $5,500,000 $750,000 $6,250,000 S1.250,000 Fixed Cost Total Fixed Costs Net Income 1,000,000 1,000,000 250,000 grants a 5% price discount, Units selling price Varaible costs costs of goods sold commission on sales 10% Contribution Margin 100,000 71.25 55.00 $9.13 $7,125,000 $5,500,000 7.13$712,500 $912,500 Fixed Cost Total Fixed Costs Net Income 1,000,000 1,000,000 (87,500) aggregate loss of customer contribution Contribution Margin-No Discount Contribution Margin-5% Discount aggregate loss of customer contribution $1,250,000 $912,500 $337,500 Financial Advantage (diadvantage) Net Income-No Discount Net Income-5% Discount Financial Advantage (diadvantage) 250,000 (87,500) (337,500)

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