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Case Solution Beauregard Textile Company

Relevant Costs for BTC


Production Volume
Direct Labour
Material
Spoilage
Dept Direct Exp
Total Relevant Cost (Per Unit)

Possible Scenarios
A. Current - BTC: $4; C&P: $3
B. Competitive - BTC: $3; C&P: $3
C. Collusive - BTC: $4; C&P: $4

Scenario Analysis (A)


Selling Price
Relevant Cost (Per Unit)
Incremental Contribution
Total Contribution

25000
0.86
0.4
0.042
0.198
1.5

50000
0.83
0.4
0.04
0.14
1.41

75000
0.8
0.4
0.04
0.12
1.36

100000
0.78
0.4
0.04
0.112
1.332

Sales
BTC
C&P
75000
150000
125000
100000
100000
80000 (20% Reduction in demand for both the

BTC

C&P

4
1.36
2.64
198000

3
1.278
1.722
258300

Industry

456300

Scenario Analysis (B)


Selling Price
Relevant Cost (Per Unit)
Incremental Contribution
Total Contribution

Scenario Analysis (C)


Selling Price
Relevant Cost (Per Unit)
Incremental Contribution
Total Contribution

BTC

C&P

3
1.298
1.702
212750

3
1.332
1.668
166800

BTC

C&P

4
1.332
2.668
266800

4
1.36
2.64
211200

Industry

379550

Industry

478000

125000
0.76
0.4
0.038
0.1
1.298

150000
0.74
0.4
0.038
0.1
1.278

175000
0.76
0.4
0.038
0.1
1.298

tion in demand for both the entities)

200000
0.8
0.4
0.04
0.1
1.34