Henderson Farms reports the following results for the month of November:Sales (10,000 units)Variable costsContribution marginFixed costsNet income$600,0001.420,000180,000110,000$70,000Management is considering the following independent courses of action to increase net income.Increase selling price by 5% with no change in totalvariable costs.2. Reduce variable costs to 66% of sales.3. Reduce fixed costs by $10,000. Calculate net income for the above courses of action.Course1. Increase selling price $2. Reduce variable costReduce fixed cost69Best course of action is$tANet IncomeIf maximizing net income is the objective, which is the best course of action?

Income statement is a financial statement that shows profitability, total revenue and total expenses…

Answered: Henderson Farms reports the following…

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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Stonebraker Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Sales (9,300 units) Variable expenses Contribution margin Fixed expenses Net operating income $ 306,900 204,600 102,300 77,500 $ 24,800 Required: a. If sales increase to 9,370 units, what would be the estimated increase in net operating income? b. If the variable cost per unit increases by $7, spending on advertising increases by $3,500, and unit sales increase by 20,500 units, what would be the estimated net operating income? c. Estimate how many units must be sold to achieve a target profit of $36,460.
Give me correct answer with explanation.vi
Henderson Farms reports the following results for the month of November: $600,000 Sales (10,000 units) 420,000 Variable costs Contribution margin 180,000 110,000 Fixed costs $ 70,000 Net income Management is considering the following independent courses of action to increase net income. Increase selling price by 5% with no change in total variable 1. costs. 2. Reduce variable costs to 66 % of sales. 3. Reduce fixed costs by $10,000. Calculate net income for the above courses of action. Course Net Income 1. Increase selling price $ 2. Reduce variable cost $ 3. Reduce fixed cost $
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Markham Farms reports the following contribution margin income statement for the month of August. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $2 but will increase fixed costs by 10%. MARKHAM FARMS Contribution Margin Income Statement Sales (1,500 Units @ $70 per unit) $105,000 Variable Costs (1,500 Units @ $15 per Unit) 22,500 Contribution Margin $82,500 Fixed Cost 40,000 Net Income (Loss) $42,500 Prepare a projected contribution margin income statement for Markham Farm assuming it purchases the new equipment. Assume sales level remains unchanged. blankMARKHAM FARMSContribution Margin Income Statement $Sales Variable Costs $Contribution Margin Fixed Cost $Net Income (Loss)
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Birchfield Company reports the following operating results for the month of February sales $900,000 (units 15,000); variable costs $472,500; and fixed costs $202.500. Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 2.5% with no change in total variable costs or units sold. 2. Reduce variable costs to 49% of sales. Instructions (a) Compute the net income to be earned under each alternative. Which course of action will produce the highest net income? (b) Birchfield's management is looking at longer term solutions to improve net income. One of the options they have reviewed will increase fixed expenses by $27,500 while reducing variable expenses by $2 per unit. Management feels that with these changes the price of the product could be reduced by $1 per unit. The decrease in price will then result in an increase in unit sales of 5% Compute the net income to be earned under this alternative. Do you recommend this…

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