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manufacturer of specialty polymers, has the following hig mers only. The president casually mentions that it would be ymerco Income Statement Thi (8000)

manufacturer of specialty polymers, has the following hig mers only. The president casually mentions that it would be ymerco Income Statement Thi (8000)

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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Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26683 nil 24762 nil Bad debt Net sales 26683 24762 COGS 22,243 21,341 Contribution margin 4440 3421 CM(%) 16.6% 13.8% SG&A 2,122 2,067 Operating income 2318 1354 Other income and interest on long-term -60 -50 debt Net income 2258 1304 (a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide? Maximum discount= * % In this case, will you have a negative impact on the profitability of the business? + X (b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the profitability? * %
Transcribed Image Text:Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26683 nil 24762 nil Bad debt Net sales 26683 24762 COGS 22,243 21,341 Contribution margin 4440 3421 CM(%) 16.6% 13.8% SG&A 2,122 2,067 Operating income 2318 1354 Other income and interest on long-term -60 -50 debt Net income 2258 1304 (a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide? Maximum discount= * % In this case, will you have a negative impact on the profitability of the business? + X (b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the profitability? * %
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