Assume the position of a consultant to the Johnsons. Your submissio...

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Assume the position of a consultant to the Johnsons. Your submission should be a consultant report to the Johnsons.
Nothing has happened yet. You have been engaged to provide advice to the Johnsons. Frame your response around the following questions (note: you do not have to answer these questions in any order (1, 2, etc.), but your organized response should answer these questions in some manner):
1. What are the main issues the Johnsons facing?
2. Organize the costs that the Johnsons are going to face (i.e. fixed, variable, mixed, step, direct, indirect, product cost, period costs etc.)? Be sure to including timing or frequency (i.e. one-time, monthly, annually, etc.)
3. Does it make sense for the Johnsons to go into the business at $1.39 per plate? Explain.
4. What would you recommend the Johnsons do?

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One of the main issues to consider is whether to accept the offer from National Auto Accessories Ltd., to supply 120,000 units of the product at $1.39 per unit. This offer requires Richard and Ken to make National the only distributor of the product in Canada meaning that the entrepreneurs could not directly market the 80,000 additional units their factory had the capacity to produce annually. The offer from National would enable the entrepreneurs to avoid some variable costs such as packaging, hardware and shipping because National planned to do their own packaging and supply the hardware.
The second main issue to consider is whether to market the product directly, and if so at how much. According to National’s sales manager there was an American competitor trying to sell a similar product at a price of CDN$1.63, so if the entrepreneurs decided to go ahead and manufacture the product they’d be limited in terms of the retail price they could set. If they set a high price they could lose market share to the American competitor so they’d have to set a price close to that of the competitor if they are to compete. Additionally, if they are to market the product themselves they’d require marketing expenses.
The third key issue to consider is the volume of the product to manufacture. According to the mould manufacturer, the mould was able to produce at least one million units meaning that it would...

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