A corporation provided the following:PercentPer Unit of Sales$ 240168100%Selling priceVariable expensesContribution margin70%$ 7230%Fixed expenses are $301,000 per month. The company is currently selling 5,000 units per month.The marketing manager thinks using sales commissions will work as an incentive for the sales staff. He has proposed a commission of $16 per unit.The sales staff would accept an overall decrease in their salaries of $65,000 per month due to the new commission program. It has beenpredicted that this would increase monthly sales by 200 units. What will be the aounnt of the overall effect on the company's monthly net operatingincome from this change? Should the company accept his proposal?

Net income, also known as profit or net profit, is the entire amount of revenue or income received…

Answered: A corporation provided the following:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Whitewater Inc sells a product that has variable costs of $40 and a selling price of $95. Its current sales total $304,000 per month. Fixed manufacturing costs total $40,000 per month and fixed selling and administrative costs total $35,000 per month. The company is considering a proposal that will increase the selling price by 10%, increase the fixed manufacturing costs by 10%, and increase the fixed selling and administrative costs by $1,500. Part 1: Compute the company's current break-even point in units. Part 2: Compute the company's current income and the current margin of safety. Part 3: Compute the new contribution margin per unit assuming the proposal is accepted. Part 4: Compute the new break-even point in units assuming the proposal is accepted. Part 5: Compute the company's income assuming the proposal is accepted and sales total 3,300 units. Part 6: Should the proposal be accepted?
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