C-Cubed makes bikes. It's standard bike is called the Speed Racer. It's Contribution Margin Income Statement for 2020 when it sold 350 bikes is as follows: Sales Less: Variable Expenses $175,000 64,750 Contribution Margin Less: Fixed Expenses Net Operating Income In 2021, C-Cubed is thinking that it can increase its sales to 375 if it takes the following actions: 1) cuts its sales price by $100 per bike and 2) switches to a more fixed pay structure for its sales people by 110,250 27,000 $83,250 eliminating the $35 per unit sales commission and increasing its selling salaries by $5,000. What would be profit impact of these changes? Multiple Choice $21,500 decrease $25,250 decrease $20,625 decrease $30,000 decrease

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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C-Cubed makes bikes. It's standard bike is called the Speed Racer. It's Contribution Margin Income Statement for 2020 when it sold 350 bikes is as follows:
Sales
$175,000
64.750
Less: Variable Expenses
Contribution Margin
Less: Fixed Expenses
Net Operating Income
In 2021, C-Cubed is thinking that it can increase its sales to 375 if it takes the following actions: 1) cuts its sales price by $100 per bike and 2) switches to a more fixed pay structure for its sales people by
eliminating the $35 per unit sales commission and increasing its selling salaries by $5,000. What would be profit impact of these changes?
110,250
27,000
$83,250
Multiple Choice
$21,500 decrease
$25,250 decrease
$20,625 decrease
$30.000 decrease
Transcribed Image Text:C-Cubed makes bikes. It's standard bike is called the Speed Racer. It's Contribution Margin Income Statement for 2020 when it sold 350 bikes is as follows: Sales $175,000 64.750 Less: Variable Expenses Contribution Margin Less: Fixed Expenses Net Operating Income In 2021, C-Cubed is thinking that it can increase its sales to 375 if it takes the following actions: 1) cuts its sales price by $100 per bike and 2) switches to a more fixed pay structure for its sales people by eliminating the $35 per unit sales commission and increasing its selling salaries by $5,000. What would be profit impact of these changes? 110,250 27,000 $83,250 Multiple Choice $21,500 decrease $25,250 decrease $20,625 decrease $30.000 decrease
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