Gushers Company produces 1000 packages of fruit snacks per month. The sales price is $5 per pack. Variable cost is $1.50 per unit, and fixed costs are $1700 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.50 to $1.80 per unit, and fixed costs will increase by 20%. At what sales price for the new product will the two alternatives (sell as is or process further) produce the same operating income? (Round your answer to the nearest cent.) Group of answer choices $3.84 $5.00 $5.64 $1.80

Gushers Company produces 1000 packages of fruit snacks per month. The sales price is $5 per pack. Variable cost is $1.50 per unit, and fixed costs are $1700 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.50 to $1.80 per unit, and fixed costs will increase by 20%. At what sales price for the new product will the two alternatives (sell as is or process further) produce the same operating income? (Round your answer to the nearest cent.) Group of answer choices $3.84 $5.00 $5.64 $1.80

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

Syntech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,400 per month in fixed costs. Syntech sells 100 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $45 per unit of variable costs, plus an increase in fixed costs of $900 per month. The current price of the camera is $170. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings? Price to be charged Feedback
Totally Tanked, Inc. sells tank tops. The firm is considering making some changes in order to achieve its goal of increasing its profit.If it makes no changes, the company anticipates the following for the coming year. Maria, one of the company’s managers suggests the following: “I think if we cut our price to $17 a tank top, we will increase our sales to 3,700,000 tank tops. I think that will help us achieve our goal” Question: Mr. Big, the CEO, upon hearing Maria’s plan says “This is great! We should go forward with your plan since we will increase sales by 700,000 tank tops.” How would you answer Mr. Big? # of tank tops to be sold 3,000,000 Selling price per tank top $20 Variable expense per tank top $8 Fixed expenses for the year $20,000,000
Supersonic Tire Company makes a special kind of racing tire. Variable costs are $210 per unit, and fixed costs are $42,000 per month. Supersonic sells 400 units per month at a sales price of $320. If the quality of the tire is upgraded, the company believes it can increase the price to $350. If so, the variable cost will increase to $220 per unit, and the fixed costs will rise by 20%. If Supersonic decides to upgrade, how will operating income be affected? A. Operating income will increase by $20. B. Operating income will decrease by $400. C. Operating income will decrease by $12,000. D. Operating income will increase by $12,000.
In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of $5.4 million. In a good year, it can produce 5.4 million hamburgers at a total cost of $6.1 million. What are the fixed costs of hamburger production? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. What is the variable cost per hamburger? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the average cost per burger when the firm produces 2 million hamburgers? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the average cost per burger when the firm produces 3 million hamburgers? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Why is the average cost lower when more burgers are produced?
Alley Company is a speaker maker. Each speaker is priced at $400. The corporation spends $300 on the speaker. The corporation believes that in order to succeed in the economy, it needs reduce its sale price to $360. The marketing department believes that by lowering the purchase price by 20%, profits will rise by 20%. Currently, the firm offers 450,000 speakers a year. What should the target expense be, rounded to the nearest cent, if the target profit margin is 28% of revenue in order to maintain the competitive price of $360? Please Help
Question: The Savannah Shirt Company is considering adding a new product line, a cloth shopping bag with custom screen printing that will be sold to grocery stores. If the current market price of cloth shopping bags is $1.25 and the company desires a net profit of 40%, what is the target cost? The company estimates the full product cost of the cloth bags will be $0.60. Should the company manufacture the cloth bags? Why or why not?
Need Help
Burke's Corner currently sells blue jeans and T-shirts. Management is considering adding fleece tops to its inventory to provide a cooler weather option. The tops would sell for $52 each with expected sales of 3,750 tops annually. By adding the fleece tops, management feels the firm will sell an additional 230 pairs of jeans at $62 a pair and 365 fewer T-shirts at $23 each. The variable cost per unit is $30 on the jeans, $14 on the T-shirts, and $26 on the fleece tops. With the new item, the depreciation expense is $32,000 a year and the fixed costs are $67,000 annually. The tax rate is 40 percent. What is the project's operating cash flow? A) $33, 545B) $26, 630C) $28, 655