**Sunland Orthotics Company: Cost Analysis**Sunland Orthotics Company distributes a specialized ankle support that sells for $30. The company's variable costs are $20 per unit, and the fixed costs total $380,000 each year.**Key Financial Details:**- **Selling Price per Unit:** $30- **Variable Cost per Unit:** $20- **Annual Fixed Costs:** $380,000This summary provides a basic financial overview for analyzing the costs and pricing strategy of the company's product. Understanding these costs is crucial for calculating the break-even point and assessing profitability. ### Case Study: Sunland's Ankle Supports Sales Strategy**Background**Last year, Sunland sold 39,000 ankle supports. The company’s marketing manager is convinced that a 10% reduction in the sales price, combined with a $46,000 increase in advertising, will result in a 27% increase in sales volume over last year. **Task****Compute the Projected Income**- Enter your calculations for projected income in the field provided. - Note: When entering negative amounts, use a negative sign before the number (e.g., -45) or use parentheses (e.g., (45)) to indicate a loss.**Input Field:**- Projected income: $ ___________**Decision Making****Evaluate Pricing Strategy**- Determine whether Sunland should implement the price reduction based on the estimated operating income.- Make a comparative analysis to decide if the new strategy results in a higher or lower operating income than the current one. **Selection Options:**- Sunland [implement/do not implement] the price reduction because the estimated operating income is [greater/less] than the current operating income. This exercise encourages students to apply analytical skills to real-world business scenarios, enhancing their understanding of pricing strategies and their impact on sales volume and income.

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

Answered: Last year, Sunland sold 39,000 ankle…

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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Hello please help with the problem below. Thanks Last year’s operating income for the Barnum company was $30,000. The selling price during the year was $15 per unit. The total variable costs were $180,000 and total fixed costs were $90,000. The sales manager wants to increase the selling price next year by 15% although she knows that the number of units sold would likely be reduced by 10%. If her proposal is adopted and her assumption about volume of sales is correct, what would the new operating income be?
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