GPXVZG300 Corp. is a merchandiser that sells it's product for $36 per unit. Variable expenses are $18 per unit, and fixed expenses total $12,000 annually. (ID#80446) Assume that GPXVZG300 sold 32,700 units last year. The manager wants to increase the sales commission by $0.2 per unit. He thinks that this move, combined with some increase in advertising, would double annual unit sales. Q.) By how much could advertising be increased with GPXVZG300's profits remaining unchanged? A.) $

GPXVZG300 Corp. is a merchandiser that sells it's product for $36 per unit. Variable expenses are $18 per unit, and fixed expenses total $12,000 annually. (ID#80446) Assume that GPXVZG300 sold 32,700 units last year. The manager wants to increase the sales commission by $0.2 per unit. He thinks that this move, combined with some increase in advertising, would double annual unit sales. Q.) By how much could advertising be increased with GPXVZG300's profits remaining unchanged? A.) $

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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Larson, Inc., manufactures backpacks. Last year, it sold 85,000 of its basic model for $25 per unit. The company estimates that this volume represents a 20 percent share of the current market. The market is expected to increase by 15 percent next year. Marketing specialists have determined that as a result of new competition, the company's market share will fall to 16 percent (of this larger market). Due to changes in prices, the new price for the backpacks will be $22 per unit. This new price is expected to be in line with the competition and have no effect on the volume estimates. Required: Estimate Larson's sales revenues from this model of backpack for the coming year. Sales revenue
Peterson Inc. currently has a contribution margin of $30 on its product. Peterson Inc. is considering spending $59,000 more on advertising this year to generate an increase in sales of 6,000 units. How will this change affect its operating income? It will increase operating income by $180,000. It will increase operating income by $239,000. It will increase operating income by $121,000. It will decrease operating income by $59,000.
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