Homework Help is Here – Start Your Trial Now!
Business
Accounting
Multiple Changes in Profit Plans In an attempt to improve profit performance, Anderson Company's management is considering a number of alternative actions. An October contribution income statement for Anderson Company follows. ง C Sales Less variable costs Direct materials ANDERSON COMPANY Contribution Income Statement For Month of October Direct labor Variable factory overhead Selling and administrative Contribution margin Less fixed costs (9,600 units x $75) (9,600 units x $10) $96,000 $720,000 (9,600 units x $10) (9,600 units x $4) (9,600 units x $2) (9,600 units x $49) 96,000 38,400 19,200 (249,600) 470,400 Factory overhead Selling and administrative Net income (loss) Show Transcribed Text 288,000 192,000 (480,000) $(9,600) a. Purchasing automated assembly equipment, which should reduce direct labor costs by $4 per unit and increase variable overhead costs by $1 per unit and fixed factory overhead by $9,600 per month. b. Reducing the selling price by $5 per unit. This should increase the monthly sales by 2,400 units. At this higher volume, additional equipment and salaried personnel would be required. This will increase fixed factory overhead by $3,200 per month and fixed selling and administrative costs by $1,440 per month. c. Buying rather than manufacturing a component of Anderson's final product. This will increase direct materials costs by $5 per unit. However, direct labor will decline $3 per unit, variable factory overhead will decline $1 per unit, and fixed factory overhead will decline $20,000 per month. d. Increasing the unit selling price by $5 per unit. This action should result in a 1,600 unit decrease in monthly sales. e. Combining alternatives (a) and (d).

Multiple Changes in Profit Plans In an attempt to improve profit performance, Anderson Company's management is considering a number of alternative actions. An October contribution income statement for Anderson Company follows. ง C Sales Less variable costs Direct materials ANDERSON COMPANY Contribution Income Statement For Month of October Direct labor Variable factory overhead Selling and administrative Contribution margin Less fixed costs (9,600 units x $75) (9,600 units x $10) $96,000 $720,000 (9,600 units x $10) (9,600 units x $4) (9,600 units x $2) (9,600 units x $49) 96,000 38,400 19,200 (249,600) 470,400 Factory overhead Selling and administrative Net income (loss) Show Transcribed Text 288,000 192,000 (480,000) $(9,600) a. Purchasing automated assembly equipment, which should reduce direct labor costs by $4 per unit and increase variable overhead costs by $1 per unit and fixed factory overhead by $9,600 per month. b. Reducing the selling price by $5 per unit. This should increase the monthly sales by 2,400 units. At this higher volume, additional equipment and salaried personnel would be required. This will increase fixed factory overhead by $3,200 per month and fixed selling and administrative costs by $1,440 per month. c. Buying rather than manufacturing a component of Anderson's final product. This will increase direct materials costs by $5 per unit. However, direct labor will decline $3 per unit, variable factory overhead will decline $1 per unit, and fixed factory overhead will decline $20,000 per month. d. Increasing the unit selling price by $5 per unit. This action should result in a 1,600 unit decrease in monthly sales. e. Combining alternatives (a) and (d).

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 4E: Differential analysis for a discontinued product The condensed product-line income statement for...
See similar textbooks
icon
Related questions
Question

Don't use AI.

Multiple Changes in Profit Plans In an attempt to improve profit performance, Anderson Company's management is considering a number of alternative actions. An October contribution income statement for Anderson Company follows. ง C Sales Less variable costs Direct materials ANDERSON COMPANY Contribution Income Statement For Month of October Direct labor Variable factory overhead Selling and administrative Contribution margin Less fixed costs (9,600 units x $75) (9,600 units x $10) $96,000 $720,000 (9,600 units x $10) (9,600 units x $4) (9,600 units x $2) (9,600 units x $49) 96,000 38,400 19,200 (249,600) 470,400 Factory overhead Selling and administrative Net income (loss) Show Transcribed Text 288,000 192,000 (480,000) $(9,600) a. Purchasing automated assembly equipment, which should reduce direct labor costs by $4 per unit and increase variable overhead costs by $1 per unit and fixed factory overhead by $9,600 per month. b. Reducing the selling price by $5 per unit. This should increase the monthly sales by 2,400 units. At this higher volume, additional equipment and salaried personnel would be required. This will increase fixed factory overhead by $3,200 per month and fixed selling and administrative costs by $1,440 per month. c. Buying rather than manufacturing a component of Anderson's final product. This will increase direct materials costs by $5 per unit. However, direct labor will decline $3 per unit, variable factory overhead will decline $1 per unit, and fixed factory overhead will decline $20,000 per month. d. Increasing the unit selling price by $5 per unit. This action should result in a 1,600 unit decrease in monthly sales. e. Combining alternatives (a) and (d).
Transcribed Image Text:Multiple Changes in Profit Plans In an attempt to improve profit performance, Anderson Company's management is considering a number of alternative actions. An October contribution income statement for Anderson Company follows. ง C Sales Less variable costs Direct materials ANDERSON COMPANY Contribution Income Statement For Month of October Direct labor Variable factory overhead Selling and administrative Contribution margin Less fixed costs (9,600 units x $75) (9,600 units x $10) $96,000 $720,000 (9,600 units x $10) (9,600 units x $4) (9,600 units x $2) (9,600 units x $49) 96,000 38,400 19,200 (249,600) 470,400 Factory overhead Selling and administrative Net income (loss) Show Transcribed Text 288,000 192,000 (480,000) $(9,600) a. Purchasing automated assembly equipment, which should reduce direct labor costs by $4 per unit and increase variable overhead costs by $1 per unit and fixed factory overhead by $9,600 per month. b. Reducing the selling price by $5 per unit. This should increase the monthly sales by 2,400 units. At this higher volume, additional equipment and salaried personnel would be required. This will increase fixed factory overhead by $3,200 per month and fixed selling and administrative costs by $1,440 per month. c. Buying rather than manufacturing a component of Anderson's final product. This will increase direct materials costs by $5 per unit. However, direct labor will decline $3 per unit, variable factory overhead will decline $1 per unit, and fixed factory overhead will decline $20,000 per month. d. Increasing the unit selling price by $5 per unit. This action should result in a 1,600 unit decrease in monthly sales. e. Combining alternatives (a) and (d).
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS