Naumann Corporation produces and sells a single product. Data concerning that product appear below:Percent ofSales100%18%82%Selling priceVariable expensesContribution marginPer Unit$ 20036$164Fixed expenses are $130,000 per month. The company is currently selling 1,200 units per month.Required:Management is considering using a new component that would increase the unit variable cost by $46. Since the new componentwould improve the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What shouldbe the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected?Note: Negative amounts should be indicated by a minus sign.Change in net operating income

The contribution margin is calculated as the difference between the sales and variable costs. The…

Answered: Naumann Corporation produces and sells…

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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Majesty Company uses target costing to ensure that its products are profitable. Assume Majesty is planning to introduce a new product with the following estimates: Estimated market price $ 1,500 Annual demand 86,000 units Life cycle 7 years Target profit 26 % return on sales Required: 1. Compute the target cost of this product. 2. Compute the target cost if Majesty wants a 36 percent return on sales. 3. Compute the target cost if Majesty wants a 7 percent return on sales.
ok ces O'Reilly Incorporated makes and sells many consumer products. The firm's average contribution margin ratio is 22%. Management is considering adding a new product that will require an additional $10,500 per month of fixed expenses and will have variable expenses of $6.5 per unit. Required: a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 22%. Note: Round your answer to 2 decimal places. b. Calculate the number of units of the new product that would have to be sold if the new product is to increase the firm's monthly operating income by $8,500. Note: Do not round intermediate calculations. a. Selling price b. Number of units per unit
Matikas Division of Shortcuts Company expects the following results for 2007:Unit sales 70,000Unit selling price P 10Unit variable cost P 4Total fixed costs P300,000Total investment P500,000The minimum required ROI is 15 percent, and divisions are evaluated on residual income. A foreign customer has approached Matikas' manager with an offer to buy 10,000 units at P7 each. If Matikas accepts the order, it would not lose any of the 70,000 units at the regular price. Accepting the order would increase fixed costs by P10,000 and investment by P40,000.What is the minimum price that Matikas could accept for the order and still maintain its expected residual income?
A company is planning a new product. Market research information suggests that the product should sell 20,000 units at $35.00/unit. The company seeks to make a margin of 20% on sales. It is estimated that the lifetime costs of the product will be as follows: a. Research and development costs $60,000 b. Manufacturing costs $25/unit c. Decommissioning Costs $40,000 What is the Target Cost per unit? What is the original lifecycle cost per unit?
Manly Beach Enterprises projects the following information for the coming year. Sales Production 1,900 units 2,000 units Selling price per sewing machine Total variable manufacturing cost Total fixed manufacturing cost Marketing and administrative cost (40% variable based on sales) $200 $160,000 $60,000 $80,000 a. Determine the projected net income using absorption costing: $ b. Determine the projected net income using variable costing: $
Jaybird Company operates in a highly competitive market where the market price for its product is $145 per unit. Jaybird desires a 30% profit per unit. Jaybird expects to sell 5,000 units. Additional information is as follows: Variable Costs per Unit Fixed Costs (total) Direct materials S 24 Overhead $ 45,000 Direct labor 25 General and administrative 18,000 Overhead 23 General and administrative 29 To achieve the target cost per unit, Jaybird must reduce total expenses by how much? Multiple Choice $ 62,000 $51,000 $70, 500 $67,500 $60, 500
Help me please
Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price $216 Unit variable cost $111 Total fixed costs $785,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the next break-even point for Flying Cloud Co. will be a.increased by 1,462 units b.increased by 1,218 units c.decreased by 1,218 units d.increased by 975 units
Kuzio Corporation produces and sells a single product. Data concerning that product appear below. Selling price Variable expenses Percent of Per Unit $ 130 78 $ 52 Sales 100% 60% 40% Contribution margin The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager belleves that a $5,000 Increase in the monthly advertising budget would result in a 140 unit increase in monthly sales volume. What should be the overall effect on the company's monthly net operating Income of this change? Multiple Choice Increase of $7,280 decrease of $2,280 Increase of $2,280 decrease of $5,000
How much should the company set as selling price if it is to achieve the target of 20% RoI?
Company XYZ has $2,500,000 in fixed costs. It sells products at an average selling price of $50.Average variable costs amount to 60% of selling price. The marketing department proposesspending $500,000 on an advertising campaign which will result in increased volume ofbetween 10,000 and 30,000 units.Determine:1.Breakeven volume before the proposed ad campaign2. Breakeven volume if ad campaign undertaken3. Minimum and maximum incremental profit if ad campaign undertaken4. Would you support the proposal? Why or why not?5. Unit volume to achieve an operating profit of $800,000 assuming the ad campaign isundertakenOperating income at unit volume of 200,000 units assuming ad campaign is undertaken7. Margin of safety assuming volume of 200,000 units is achieved and ad campaignundertaken8. Incremental operating income if an additional 1,000 units are sold can you please review and answer questions 4-8?
Sinbad manufactures decorative iron railings. In preparing for next year's operations, management has developed the following estimates: (LO# 3) Units Total Per unit Sales 20,000 1,000,000 50 Variable Expenses 600,000 30 CM 400,000 20 Total Fixed Ex ses 110,000 Operating Profit 290,000 Required: EXCEL Compute the following items: a. Unit contribution margin. b. Contribution margin ratio. c. Break-even in units and dollar sales. d. Margin of safety in dollar amount and percentage. e. If the sales volume increases by 20% with no change in total fixed expenses, what will be the change in net operating income? Verify your answer f. If the per unit variable production costs increase by 15%, and if fixed selling and administrative expenses increase by 12%, what will be the new break-even point in dollar sales? g. if the company would like to achieve a profit of $90,000 next year, what would be the break-even point in units and dollar amount to earn that target? h. If monthly sales increase…

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