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Last month Annie's Homemade sold 5,000 servings of ice cream for $5.00 each. Its variable cost is $1.25 per serving and its total fixed costs were $11,000. Required: Calculate the change in next month's profit if: Unit sales increase from 5,000 to 5,200 and all else holds constant. The selling price per unit increases from $5.00 to $5.50, unit sales decrease by 6%, and all else holds constant. The variable cost per serving decreases from $1.25 to $1.15 and all else holds constant. The fixed costs increase by $2,000, unit sales increase by 8%, and all else holds constant.

Last month Annie's Homemade sold 5,000 servings of ice cream for $5.00 each. Its variable cost is $1.25 per serving and its total fixed costs were $11,000. Required: Calculate the change in next month's profit if: Unit sales increase from 5,000 to 5,200 and all else holds constant. The selling price per unit increases from $5.00 to $5.50, unit sales decrease by 6%, and all else holds constant. The variable cost per serving decreases from $1.25 to $1.15 and all else holds constant. The fixed costs increase by $2,000, unit sales increase by 8%, and all else holds constant.

FINANCIAL ACCOUNTING
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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Last month Annie's Homemade sold 5,000 servings of ice cream for $5.00 each. Its variable cost is $1.25 per serving and its total fixed costs were $11,000. Required: Calculate the change in next month's profit if: Unit sales increase from 5,000 to 5,200 and all else holds constant. The selling price per unit increases from $5.00 to $5.50, unit sales decrease by 6%, and all else holds constant. The variable cost per serving decreases from $1.25 to $1.15 and all else holds constant. The fixed costs increase by $2,000, unit sales increase by 8%, and all else holds constant.
Transcribed Image Text:Last month Annie's Homemade sold 5,000 servings of ice cream for $5.00 each. Its variable cost is $1.25 per serving and its total fixed costs were $11,000. Required: Calculate the change in next month's profit if: Unit sales increase from 5,000 to 5,200 and all else holds constant. The selling price per unit increases from $5.00 to $5.50, unit sales decrease by 6%, and all else holds constant. The variable cost per serving decreases from $1.25 to $1.15 and all else holds constant. The fixed costs increase by $2,000, unit sales increase by 8%, and all else holds constant.
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