Monroe Company produces and sells three products. Information regarding these three products for 2024, the most recent year, is provided below: selling price per unit variable costs per unit number of units sold selling price per unit variable costs per unit number of units sold Product #1 $26 $14 1,500 Product #2 $37 $22 3,400 Product # 3 $43 selling price per unit variable costs per unit $26 number of units sold 3,000 Monroe Company reported total fixed costs of $102,000 in 2024. Monroe Company made the following changes in 2025: 1. increased the advertising of Product #1 by $8,640. 2. increased the quality of the components of Product #1 thus its variable cost per unit increased to $16. 3. increased the selling price of Product #1. These changes resulted in the sales volume of Product #1 doubling. However, this also resulted in some customers currently buying Product #3 to start buying Product #1 instead. Thus, the number of units sold of Product # 3 decreased by 10 % . Assume the sales of Product #2 were unchanged. Calculate the selling price per unit of Product #1 that is needed if Monroe Company wants to increase the net income for 2025 by 20% over the net income from 2024. Hint given the changes made in 2025 the sales mix ratio from 2024 is no longer valid. Do not try and use last years sales mix ratio to solve this problem. -
Monroe Company produces and sells three products. Information regarding these three products for 2024, the most recent year, is provided below: selling price per unit variable costs per unit number of units sold selling price per unit variable costs per unit number of units sold Product #1 $26 $14 1,500 Product #2 $37 $22 3,400 Product # 3 $43 selling price per unit variable costs per unit $26 number of units sold 3,000 Monroe Company reported total fixed costs of $102,000 in 2024. Monroe Company made the following changes in 2025: 1. increased the advertising of Product #1 by $8,640. 2. increased the quality of the components of Product #1 thus its variable cost per unit increased to $16. 3. increased the selling price of Product #1. These changes resulted in the sales volume of Product #1 doubling. However, this also resulted in some customers currently buying Product #3 to start buying Product #1 instead. Thus, the number of units sold of Product # 3 decreased by 10 % . Assume the sales of Product #2 were unchanged. Calculate the selling price per unit of Product #1 that is needed if Monroe Company wants to increase the net income for 2025 by 20% over the net income from 2024. Hint given the changes made in 2025 the sales mix ratio from 2024 is no longer valid. Do not try and use last years sales mix ratio to solve this problem. -
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
S2
Transcribed Image Text:Monroe Company produces and sells three products. Information
regarding these three products for 2024, the most recent year,
is provided below:
selling price per unit
variable costs per unit
number of units sold
selling price per unit
variable costs per unit
number of units sold
Product #1
$26
$14
1,500
Product #2
$37
$22
3,400
Product #3
$43
$26
3,000
selling price per unit.
variable costs per unit
number of units sold
Monroe Company reported total fixed costs of $102,000 in 2024.
Monroe Company made the following changes in 2025:
1. increased the advertising of Product #1 by $8,640.
2. increased the quality of the components of Product #1
thus its variable cost per unit increased to $16.
3. increased the selling price of Product #1.
These changes resulted in the sales volume of Product #1 doubling.
However, this also resulted in some customers currently buying
Product # 3 to start buying Product #1 instead. Thus, the number
of units sold of Product #3 decreased by 10%. Assume the sales
of Product #2 were unchanged.
Calculate the selling price per unit of Product # 1 that is needed
if Monroe Company wants to increase the net income for 2025 by 20%
over the net income from 2024. Hint - given the changes made in
2025 the sales mix ratio from 2024 is no longer valid. Do not try
and use last years sales mix ratio to solve this problem.
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