3. Sales (19,500 units x $30 per unit). Variable expenses. Contribution margin Fixed expenses. Net operating loss. 4. Required: 2. 1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. The president believes that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $80,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? $585,000 409,500 Chapter 5 175,500 180,000 $ (4,500) Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $60,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $9,750? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month. b. a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. Assume that the company expects to sell 26,000 units next month. Prepare two contribu- tion format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) C. Would you recommend that the company automate its operations? Explain.
3. Sales (19,500 units x $30 per unit). Variable expenses. Contribution margin Fixed expenses. Net operating loss. 4. Required: 2. 1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales. The president believes that a $16,000 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $80,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company's monthly net operating income? $585,000 409,500 Chapter 5 175,500 180,000 $ (4,500) Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $60,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)? Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by 75 cents per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $9,750? 5. Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses would increase by $72,000 each month. b. a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales. Assume that the company expects to sell 26,000 units next month. Prepare two contribu- tion format income statements, one assuming that operations are not automated and one assuming that they are. (Show data on a per unit and percentage basis, as well as in total, for each alternative.) C. Would you recommend that the company automate its operations? Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:3.
Sales (19,500 units x $30 per unit).
Variable expenses.
Contribution margin
Fixed expenses.
Net operating loss.
4.
Required:
2.
1. Compute the company's CM ratio and its break-even point in unit sales and dollar sales.
The president believes that a $16,000 increase in the monthly advertising budget, combined
with an intensified effort by the sales staff, will result in an $80,000 increase in monthly sales.
If the president is right, what will be the increase (decrease) in the company's monthly net
operating income?
$585,000
409,500
Chapter 5
175,500
180,000
$ (4,500)
Refer to the original data. The sales manager is convinced that a 10% reduction in the selling
price, combined with an increase of $60,000 in the monthly advertising budget, will double
unit sales. If the sales manager is right, what will be the revised net operating income (loss)?
Refer to the original data. The Marketing Department thinks that a fancy new package for the
laptop computer battery would grow sales. The new package would increase packaging costs
by 75 cents per unit. Assuming no other changes, how many units would have to be sold each
month to attain a target profit of $9,750?
5.
Refer to the original data. By automating, the company could reduce variable expenses by
$3 per unit. However, fixed expenses would increase by $72,000 each month.
b.
a. Compute the new CM ratio and the new break-even point in unit sales and dollar sales.
Assume that the company expects to sell 26,000 units next month. Prepare two contribu-
tion format income statements, one assuming that operations are not automated and one
assuming that they are. (Show data on a per unit and percentage basis, as well as in total,
for each alternative.)
C. Would you recommend that the company automate its operations? Explain.
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