Eagle Sales has developed the following budgeted income statement. The company is experimenting with new engineering techniques and believes it can reduce variable cost to $4 per unit and significantly improve the product. The innovations would increase fixed cost to $10,000. The company expects to be able to maintain current sales (2,500 units). Assuming Eagle decides to pursue this strategy, by what amount would the budgeted profit ?change Sales Revenue (2,500 units x $10 sales price) Total Variable Expenses (2,500 x $6 per unit). Contribution Margin Fixed Expenses $25,000 (15,000) 10,000 (6.000) $4.000 Net Income decrease by $4,000 O increase by $4,000 decrease by $1,000 O decrease by $2,000 O increase by $1,000

Eagle Sales has developed the following budgeted income statement. The company is experimenting with new engineering techniques and believes it can reduce variable cost to $4 per unit and significantly improve the product. The innovations would increase fixed cost to $10,000. The company expects to be able to maintain current sales (2,500 units). Assuming Eagle decides to pursue this strategy, by what amount would the budgeted profit ?change Sales Revenue (2,500 units x $10 sales price) Total Variable Expenses (2,500 x $6 per unit). Contribution Margin Fixed Expenses $25,000 (15,000) 10,000 (6.000) $4.000 Net Income decrease by $4,000 O increase by $4,000 decrease by $1,000 O decrease by $2,000 O increase by $1,000

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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