acc522-Fluid Company operates a small factory in which

Assignments 3Instructions1. This is an individual assignment.2. Write the memo using an accepted format.Fluid Company operates a small factory in which it manufactures two products: Fruju and Aqua.Production and sales results for last years were as follows: Units soldSelling price per unitVariable cost per unitFixed cost per unit FrujuAqua9,80021,000$95$75$50$40$24$24 For purposes of simplicity, the firm averages total fixed costs over the total number of units of Fruju andAqua produced and sold.The research department has developed a new product, Mixed Fruit as a replacement for Aqua. Marketstudies show that Fluid Company could sell 10,000 units of Mixed Fruit next year at a price of $115.The variable cost per unit of Mixed Fruit is $45.The introduction of product Mixed Fruit will lead to a 10% increase in demand for product Fruju anddiscontinuation of product Aqua.If the company does not introduce the new product, it expects next year’s results to be the same as lastyear’s.Required:Write a memo to the management of Fluid Company discussing whether the Fluid Company shouldintroduce Product Mixed Fruit next year. Explain why or why not with appropriate computations.


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