Required:1. Assume that Gaston immediately reduces the bid price to $92. How lon

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    Required:1. Assume that Gaston immediately reduces the bid price to $92. How long will it be before the unit contribution margin is restored to $10 assuming that quality costs are reduced as expected and that sales are maintained at 100000 units per year (25000 per quarter)?2. Assume that Gaston holds the price at $92 until the 4 percent target is achieved. At this new level of quality costs should the price be reduced? If so by how much should the price be reduced and what would be the increase in contribution margin? Assume that price can be reduced only in $1 increments.3. Now assume that Gaston begins the quality improvement program but does not immediately reduce the bid price. Instead prices will be reduced when profitable to do so. Assume that prices can be reduced only by $1 increments. Identify when the first future price change (if any) should occur.4. Discuss the differences in viewpoints concerning the decision to decrease prices and the short-run contribution margin analysis done by Helen the controller. Did quality cost information play an important role in the strategic decision making illustrated by the problem?

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