Naumann Corporation produces and seits a single product. Data concerning that product appear belowPercent ofSales100%134Selling priceVariable expensesContribution marginPer Unit$22033$187Save & ExiFixed expenses are $140,000 per month. The company is currently selling 1.100 units per month.Required:Management is considering using a new component that would increase the unit variable cost by $42. Since the new componentwould improve the company's product, the marketing manager predicts that monthly sales would increase by 300 units. What shouldbe the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? (Negativeamounts should be indicated by a minus sign.)

Variable cost remains the same per unit while the total cost varies in direct proportion to 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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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?
Company experts in Cars and can produce at most 900 units per month. Its current monthly production variables are a fixed cost of $60,000, a constant average variable cost of $2,000 per unit, and a selling price of $2, 500 per unit Determine the contribution margin if the fixed cost is increased to $82,000, the average variable cost is increased to $3, 470, and the selling price is increased to$4,160 Enter answer in terms of dollars, rounded to the nearest whole dollar
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Patriot Company manufactures flags in two sizes, small and large. The company has total fixed costs of $260,000 per year. Additional data follow. Sales price per unit Variable costs per unit Sales mix percent Small $ 26 $ 13 80% Large $33 $ 20 20% The company is considering buying new equipment that would increase total fixed costs by $51,500 per year and reduce the variable costs of each type of flag by $1 per unit. Break-even point in units Break-even point - Small Break-even point - Large Required: 1. Compute the weighted-average contribution margin without the new equipment. 2. Assume the new equipment is not purchased. Determine the break-even point in total sales units and the break-even point in units for each product. 3. Assume the new equipment is purchased. Compute the break-even point in total sales units and the number of units to sell for each product. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume the new…
Your Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual sales in units 3,000 Selling price per unit $309 Variable costs per unit: Production $130 Selling $50 Traceable annual fixed costs: Production $51,000 Selling $75,000 Allocated annual fixed cost $54,000 If the new product is added to the existing product line, then sales of existing products will decline. As a consequence, the contribution margin of the existing product lines is expected to drop $78,000 per year. What is the increase in net income if the new product is added next year? This is a reverse drop the segment. New CM is positive and new FC and lost CM are negative.
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