**Forrester Company's Equipment Investment Analysis**Forrester Company is contemplating the acquisition of new equipment. This investment would result in an increase in monthly fixed costs by $30,000 (from $210,000 to $240,000) and a decrease in current variable costs per unit by $10 (from $70 to $60 per unit). The selling price of $100 per unit will remain unchanged throughout this analysis. Presently, Forrester's break-even sales are calculated at $490,000, with the current break-even units at 9,300. Considering the acquisition of this equipment, the updated contribution margin ratio is evaluated and questions related to the new ratio are posed as follows:**Multiple Choice Answer Options:**1. 30%2. 60%3. 40%4. 10%Learners are prompted to apply their understanding of break-even analysis and contribution margin ratio to determine the correct revised margin ratio if Forrester proceeds with this new equipment purchase.**Note:**No graphs or diagrams are present in the document image provided. An understanding of the break-even analysis concept is necessary to answer the question regarding the revised contribution margin ratio accurately.

Contribution margin: It refers to the leftover revenue after deducting or decreasing the variable…

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $210,000 to $240,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $490,000 and current break-even units are 9,300. If Forrester purchases this new equipment, the revised contribution margin ratio would be: Multiple Choice O O 30%. 60%. 40% 10%

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $210,000 to $240,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $490,000 and current break-even units are 9,300. If Forrester purchases this new equipment, the revised contribution margin ratio would be: Multiple Choice O O 30%. 60%. 40% 10%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A cafe currently offers a cup of cafe latte for P100. The variable costs are P58 per cup, and 10,000 cups are sold annually and a profit of P200,030 is realized per year. A new design in making the coffee will increase the variable costs by 20% and Fixed Costs by 10% but sales will increase to 12,493 cups per year. If we employ the new design, at what selling price do we break even?
Your uncle is considering investing in a new company that will produce high quality stereo speakers. The sales price would be set at 1.5 times the variable cost per unit; the variable cost per unit is estimated to be $75.00; and fixed costs are estimated at $1,200,000. What sales volume would be required to break even, i.e., to have EBIT = zero? O 28,880 O 16,000 O none of the above O 30,400 Ⓒ33,600
Hanisch Corporation would like to use target costing for a new product it is considering introducing. At a selling price of $32 per unit, management projects sales of 30,000 units. The new product would require an investment of $300,000. The desired return on investment is 16%. The target cost per unit is closest to: (Do not round intermediate calculations.) Question 10 options: $40.00 $30.40 $3.20 $32.00
XYZ company currently sells 15,000 units a month for $50 each, has variable costs of $10 per unit, and fixed costs of $300,000. The company is considering increasing the price of its units to $60 per unit. If the price is changed, how many units will the company need to sell for profit to remain the same as before the price change? Select one: O a. None of the given answers. O b. 7,500 O c. 11,250 O d. 9,000 O e. 12,000
NUBD Company manufactures a face masks that sells for P10 per unit. This is its sole product and it has projected the break-even point at 50,000 units in the coming period. If fixed costs are projected at P100,000, what is the projected variable cost ratio?
The NUBD Co. is expecting an increase in fixed costs by P78,750 upon moving their place of business to the downtown area. Likewise it is anticipating that the selling price per unit and the variable expenses will not change. At present, the sales volume necessary to breakeven is P750,000 but the expected increase in fixed costs, the sales volume necessary to breakeven will go up to P975,000. Based on these predictions, what would be the required peso sales to earn P35,000 in the coming year?
1. an industrial equipment company assumes that their crane model adds $10,000 in lifetime reliability value and $8,000 in servicevalue per crane. The equivalent competitor model is priced at $82,000. If the companydecides to discount the total value-added price by 15%, what is the final price to the consumer? I
Help!
The B Co. is expecting an increase in fixed costs by P78,750 upon moving their place of business to the downtown area. Likewise it is anticipating that the selling price per unit and the variable expenses will not change. At present, the sales volume necessary to breakeven is P750,000 but the expected increase in fixed costs, the sales volume necessary to breakeven will go up to P975,000. Based on these predictions, what would be the required peso sales to earn P35,000 in the coming year? A.P1,175,000 B.P950,000 C.P425,000 D.P1,075,000
The NUBD Co. is expecting an increase in fixed costs by P78,750 upon moving their place of business to the downtown area. Likewise it is anticipating that the selling price per unit and the variable expenses will not change. At present, the sales volume necessary to breakeven is P750,000 but the expected increase in fixed costs, the sales volume necessary to breakeven will go up to P975,000. Based on these predictions, what would be the required peso sales to earn P35,000 in the coming year? A. P1,175,000 B. P950,000 C. P425,000 D. P1,075,000
type the correct answwer for the ;problem bellow