AH 5-7 Changes in Variable Costs, Fixed Costs, Selling Price, and Unit Sales LO 5-7Last month Annie's Homemade sold 5,000 servings of ice cream for $5.00 each. Its variable cost is $1.25 per serving and its total fixed costs were $11,000.Required:Calculate the change in next month’s profit if:Unit sales increase from 5,000 to 5,200 and all else holds constant.The selling price per unit increases from $5.00 to $5.50, unit sales decrease by 6%, and all else holds constant.The variable cost per serving decreases from $1.25 to $1.15 and all else holds constant.The fixed costs increase by $2,000, unit sales increase by 8%, and all else holds constant.

For calculation of profit:The following format and concept is used Statement of…

Answered: AH 5-7 Changes in Variable Costs, Fixed…

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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AH 5-7 Changes in Variable Costs, Fixed Costs, Selling Price, and Unit Sales LO 5-7

Last month Annie's Homemade sold 5,000 servings of ice cream for $5.00 each. Its variable cost is $1.25 per serving and its total fixed costs were $11,000.

Required:

Calculate the change in next month’s profit if:

Unit sales increase from 5,000 to 5,200 and all else holds constant.
The selling price per unit increases from $5.00 to $5.50, unit sales decrease by 6%, and all else holds constant.
The variable cost per serving decreases from $1.25 to $1.15 and all else holds constant.
The fixed costs increase by $2,000, unit sales increase by 8%, and all else holds constant.

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