Joan Company produces and sells four products. Information about these products for the month of November is provided below: selling price per unit variable costs per unit number of units sold Product #1 $177 $101 2,300 Product #3 $93 $ 58 3,600 selling price per unit variable costs per unit number of units sold The fixed costs for November totaled $260,300. Product #2 $113 $ 84 5,800 Product #4 $126 $78 4,500

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Joan Company produces and sells four products. Information.
about these products for the month of November is provided
below:
selling price per unit
variable costs per unit
number of units sold
selling price per unit
variable costs per unit
number of units sold
Product #1
$177
$101
2,300
Product # 3
$93
$ 58
3,600
Product #2
$113
$ 84
5,800
Product #4
$126
$78
4,500
The fixed costs for November totaled $260,300.
Joan Company made the following changes in December:
1. Decreased the selling price of Product #1.
2. Increased the advertising of Product #1 by $54,260.
3. Automated a portion of the production process related
to Product #1. This change reduced the variable costs
of Product #1 by $4 per unit.
These changes resulted in the sales volume of Product #1
doubling. However, this also resulted in some customers
currently buying Product # 3 to start buying Product #1
instead. Thus, the sales of Product #3 decreased by 10%.
Assume the sales of Product # 2 and Product #4 were not
impacted by these changes.
Calculate the selling price per unit for Product #1
that is needed in December in order for the December
net income to be 20% larger than the November net
income.
Transcribed Image Text:Joan Company produces and sells four products. Information. about these products for the month of November is provided below: selling price per unit variable costs per unit number of units sold selling price per unit variable costs per unit number of units sold Product #1 $177 $101 2,300 Product # 3 $93 $ 58 3,600 Product #2 $113 $ 84 5,800 Product #4 $126 $78 4,500 The fixed costs for November totaled $260,300. Joan Company made the following changes in December: 1. Decreased the selling price of Product #1. 2. Increased the advertising of Product #1 by $54,260. 3. Automated a portion of the production process related to Product #1. This change reduced the variable costs of Product #1 by $4 per unit. These changes resulted in the sales volume of Product #1 doubling. However, this also resulted in some customers currently buying Product # 3 to start buying Product #1 instead. Thus, the sales of Product #3 decreased by 10%. Assume the sales of Product # 2 and Product #4 were not impacted by these changes. Calculate the selling price per unit for Product #1 that is needed in December in order for the December net income to be 20% larger than the November net income.
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