C) Going back to the original data, the team speculates that they might be able to achieve profitability without changing the sales price if they were to reduce the costof materials used in manufacture. If the direct materials cost were reduced by eighty cents per unit, how many units would have to be soldi) to break even?ii) to earn a profit of $25,000?D) Again with original data, the team speculates that the problem might lie in inadequate promotion. They want to know by how much they could increase advertisingand still allow the company to earn a target profit of 5% of sales on sales of 60,000 units. On these Excel sheets, you will need to prepare a complete projected income statement in the contribution format for each scenario, in the manner of a flexible budget.The cells will be checked for appropriate formulas, when appropriate. Please highlight the specific answer to the question being posed.Carolina Manufacturing Company has been operating at a loss for several years. A management team has assembled to determine what course of action to takenext year to reach profitability. They begin by reviewing the most recent income statement (below).Sales (45,000 units at $15)Less cost of goods sold:Gross marginLess operating expensesNet lossDirect materialsDirect laborManufacturing overheadCarolina Manufacturing CompanyIncome StatementFor the Year Ended December 31Selling expensesVariableSales commissiShippingFixed (advertisiAdministrative expensesVariable (billingFixed (salaries135,000117,450147,75040,5008,100180,0002,70072.000$675,000400,200274,800228,60074,700($28,500)All variable expenses vary with the number of units sold, except for sales commissions, which are based on a percentage of sales dollars. Variable manufacturingoverhead is forty-five cents per unit. The plant has a capacity of 75,000 units per year.

The latest income statement of Carolina Manufacturing company is given to us. The income statement…

C) Going back to the original data, the team speculates that they might be able to achieve profitability without changing the sales price if they were to reduce the cost of materials used in manufacture. If the direct materials cost were reduced by eighty cents per unit, how many units would have to be sold i) to break even? ii) to earn a profit of $25,000? D) Again with original data, the team speculates that the problem might lie in inadequate promotion. They want to know by how much they could increase advertising and still allow the company to earn a target profit of 5% of sales on sales of 60,000 units.

C) Going back to the original data, the team speculates that they might be able to achieve profitability without changing the sales price if they were to reduce the cost of materials used in manufacture. If the direct materials cost were reduced by eighty cents per unit, how many units would have to be sold i) to break even? ii) to earn a profit of $25,000? D) Again with original data, the team speculates that the problem might lie in inadequate promotion. They want to know by how much they could increase advertising and still allow the company to earn a target profit of 5% of sales on sales of 60,000 units.

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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