Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $61. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 30 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesn't increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.Round your answers to two decimal places. Round break-even units to a whole number.Selling Price, Variable Cost and Fixed Cost Change Analysis With CurrentPriceWith DecreasedVC andIncreased FCWith Increased SP,Decreased VC,and Increased FCSales Price per Unit Variable Cost per Unit Contribution Margin per Unit Fixed Costs Break-even in Units Break-even in Dollars Monthly Contribution Margin Income Statement With CurrentPriceWith DecreasedVC andIncreased FCWith Increased SP,Decreased VC,and Increased FCUnit Sales, Expected Sales Variable Costs Contribution Margin Fixed Costs Net Income Monthly Contribution Margin Income StatementWith DecreasedWith Increased SP,With CurrentVC andDecreased VC,PriceIncreased FCand Increased FCUnit Sales, Expected800Sales$$Variable CostsContribution Margin$4$4Fixed CostsNet Income$$$ Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $61. What would happen if she purchased the newoven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small priceincrease will decrease the sales by only 30 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in unitsand dollars change if she doesn't increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement foreach of these cases.Round your answers to two decimal places. Round break-even units to a whole number.Selling Price, Variable Cost and Fixed Cost Change AnalysisWith Decreased With Increased SP,With CurrentVC andDecreased vC,PriceIncreased FCand Increased FCSales Price per Unit$1.752$1.751.95Variable Cost per Unit0.300.20 V0.20Contribution Margin per Unit$1.451.55$1.75Fixed Costs$435496496Break-even in Units300Break-even in Dollars$525

Given, Sales Price per Unit $1.75 Variable Cost per Unit 0.30 Contribution Margin per…

Answered: Kylie's Cookies is considering the…

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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Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $61. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 30 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesn't increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.

Round your answers to two decimal places. Round break-even units to a whole number.

Selling Price, Variable Cost and Fixed Cost Change Analysis
	With Current Price	With Decreased VC and Increased FC	With Increased SP, Decreased VC, and Increased FC
Sales Price per Unit
Variable Cost per Unit
Contribution Margin per Unit
Fixed Costs
Break-even in Units
Break-even in Dollars

Monthly Contribution Margin Income Statement
	With Current Price	With Decreased VC and Increased FC	With Increased SP, Decreased VC, and Increased FC
Unit Sales, Expected
Sales
Variable Costs
Contribution Margin
Fixed Costs
Net Income

Monthly Contribution Margin Income Statement
With Decreased
With Increased SP,
With Current
VC and
Decreased VC,
Price
Increased FC
and Increased FC
Unit Sales, Expected
800
Sales
$
$
Variable Costs
Contribution Margin
$4
$4
Fixed Costs
Net Income
$
$
$

Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $61. What would happen if she purchased the new
oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price
increase will decrease the sales by only 30 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units
and dollars change if she doesn't increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for
each of these cases.
Round your answers to two decimal places. Round break-even units to a whole number.
Selling Price, Variable Cost and Fixed Cost Change Analysis
With Decreased With Increased SP,
With Current
VC and
Decreased vC,
Price
Increased FC
and Increased FC
Sales Price per Unit
$1.75
2$
1.75
1.95
Variable Cost per Unit
0.30
0.20 V
0.20
Contribution Margin per Unit
$1.45
1.55
$
1.75
Fixed Costs
$435
496
496
Break-even in Units
300
Break-even in Dollars
$525

Expert Solution

Step 1

Given,

Sales Price per Unit	$1.75
Variable Cost per Unit	0.30
Contribution Margin per Unit	$1.45
Fixed Costs	$435
Break-even in Units	300
Break-even in Dollars	$525

Unit Sales, Expected

800

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