Kyonggi Machine Corporation in Suwon reports the following operating results for the month of June in 2020.   KYONGGI MACHINE CORPORATION CVP Income Statement For the Month Ended June 30, 2020 (Currency Unit: Korean Won, )   Total per unit Sales(5000 units)  300,000,000₩ 60000₩ Variable costs 180,000,000 36000 Contribution margin  120,000,000 24000₩ Fixed expenses  100,000,000   Net income  20,000,000₩   To increase net income, management is considering reducing the selling price by 10%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 25%   (Instructions)   Compute the break-even point in units and monetary amount: (a) Assuming no changes to sales price or costs (b) Assuming changes to sales price and volume as described above.  2. Comment on your findings.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question
  1. Kyonggi Machine Corporation in Suwon reports the following operating results for the month of June in 2020.

 

KYONGGI MACHINE CORPORATION

CVP Income Statement

For the Month Ended June 30, 2020

(Currency Unit: Korean Won, )

  Total per unit
Sales(5000 units)  300,000,000₩ 60000₩
Variable costs 180,000,000 36000
Contribution margin  120,000,000 24000₩
Fixed expenses  100,000,000  
Net income  20,000,000₩  

To increase net income, management is considering reducing the selling price by 10%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 25%

 

(Instructions)

 

  1. Compute the break-even point in units and monetary amount:

(a) Assuming no changes to sales price or costs

(b) Assuming changes to sales price and volume as described above. 

2. Comment on your findings. 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Inventory Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education