Pick Yes as your solution: You decide that the best way to increase your sales 10 percent is to lower your prices 10 percent on all repair charges in your shop. You currently have 100 customers and are operating at 90% capacity. Your current labor rate is $100 per hour. What would the increase, or decrease, in sales be if you could attract the extra 10 percent of business at a reduced labor rate of 10% ? Assume you will bill each customer for one hour of labor each. Hint: If your answer to question #12 was yes, you will have a positive number. If your answer to question #12 was no, you will have a negative number. Assume 100% capacity is 111 customers.

Pick Yes as your solution: You decide that the best way to increase your sales 10 percent is to lower your prices 10 percent on all repair charges in your shop. You currently have 100 customers and are operating at 90% capacity. Your current labor rate is $100 per hour. What would the increase, or decrease, in sales be if you could attract the extra 10 percent of business at a reduced labor rate of 10% ? Assume you will bill each customer for one hour of labor each. Hint: If your answer to question #12 was yes, you will have a positive number. If your answer to question #12 was no, you will have a negative number. Assume 100% capacity is 111 customers.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8EB: Shonda & Shonda is a company that does land surveys and engineering consulting. They have an...

See similar textbooks

Similar questions

Solve each of the following questions using both pricing formulas and Excel. 5. You are managing a small company and need to buy some equipment for your product line. Kangaroo Manufacturing is offering free credit on a $20,000 piece of equipment. You pay down $2,000 and then $600 a month for the next 30 months. Turtle Machines does not offer free credit but will give you $2,000 off the list price. If the rate of interest is 10% (APR) a year, which company is offering a better deal?
A local pizza shop owner decides to hire an economic consultant to help him set his prices. Currently, one slice of pizza costs $2 and the store sells about 800 slices per week. The pizza shop's current revenue from sales is equal to $____. The economic consultant estimates that the price elasticity of demand is equal to -0.25, and suggests that the shop owner should increase the price of a slice of pizza by $0.50; that is, the consultant recommends increasing the price of pizza by ____%. The consultant claims that doing so would (a. Increase b. Decrease or C.have no effect on)_____ the number of slices sold by ____% or ____ slices. As a result, the economist predicts that the new revenue would be ____ Thus as a result of the increase in the price there is ____ in revenue. This is due to the fact that the pizza shop owner was operating on the ____ portion of the demand curve. (fill in the blanks)
The Chimes Clock Company sells a particular clock for $40. The variable costs are $23 per clock and the breakeven point is 230 clocks. The company expects to sell 280 clocks this year. If the company actually sells 430 clocks, what effect would the sale of additional 150 clocks have on operating income? Explain your answer. The sale of an additional 150 clocks would operating income by the amount of The total effect would amount to
You want to open up a custom skateboard shop. You can sell each skateboardfor $160. It takes 3 hours to make each skateboard. Each skateboardmaker earns $25 per hour. Each skateboard costs $15 in raw materials. Youestimate that your fixed costs are $20,000 per month.a. What is the contribution margin?b. How many skateboards must be sold each month in order to break even?c. What is the break-even dollar amount?d. How many skateboards must be sold to earn a $10,000 profit each month?e. What is your total monthly revenue if you want to earn a profit of $8,000?
You are considering opening a copy service in the student union. You estimate your fixed cost at $15,000 and the variable cost of each copy sold at $0.01. You expect the selling price to average $0.05. a) What is the break-even point in dollars? b) What is the break-even point in units?
You have developed the following estimates for procuring an item for your manufacturing operations:? is 3,600 units yearly (10 units per day)? is ₱25 per item? is ₱35 per order? is 25% annuallyThe following two (2) options are available for you:Option 1: the supplier can supply all items at once.Option 2: The supplier can supply 15 items per day.Based on the information you have, which of the above options would you prefer?
The Tick Tock Clock Company sells a particular clock for $75. The variable costs are $15 per clock and the breakeven point is 230 clocks. The company expects to sell 280 clocks this year. If the company actually sells 355 clocks, what effect would the sale of additional 75 clocks have on operating income? Explain your answer The sale of an additional 75 dlocks would aller an. operating income by the amount of The total effect would amount to 4
A manager must decide how many machines of a certain type to purchase. Each machine can process 100 customers per day. One machine will result in a fixed cost of $2,100 per day, while two machines will result in a fixed cost of $3,700 per day. Variable costs will be $16 per customer, and revenue will be $45 per customer. a. Determine the break-even point for each range. (Round your answers to the next whole number.) One machine Two machines b. If estimated demand is 90 to 120 customers per day, how many machines should be purchased?
Bill Prichett’s store makes and sells small pottery items which are sold at $10 per item. Fixed cost for the store is $1000 and the variable cost per item is $5. (a) Find the break-even quantity. (b) How many items should the store make to realize a profit of $25000? revenue of $25000? (c) What is the break-even quantity if Bill wants to earn a salary of $15000?
Please help me with this accounting homework question, I am having so much trouble.
?
You have recently hired an equipment operator for $30.00 per hour. To determine his/her billing rate you simply multiply $30.00 by 1.20 to ensure you get a 20% profit margin. Is this process correct?