Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. Their current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversify the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26939 24293 Bad debt nil nil Net sales 26939 24293 COGS 22,243 21,341 Contribution margin 4696 2952 CM(%) 17.4% 12.2% SG&A 2,122 2,067 Operating income 2574 885 Other income and interest on long-term -60 -50 debt Net income 2514 835 (a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide? Please keep one decimal in the blank Maximum discount= 96 In this case, will you have a negative impact on the contribution margin ($) of the business? No • (b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the contribution margin?

Question based on modified problems 3.3 from the reference text [Flynn (2009)] from page 78 of the textbook: Polymerco, a North American manufacturer of specialty polymers, has the following highly condense income statement, given in the table below. Their current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversify the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26939 24293 Bad debt nil nil Net sales 26939 24293 COGS 22,243 21,341 Contribution margin 4696 2952 CM(%) 17.4% 12.2% SG&A 2,122 2,067 Operating income 2574 885 Other income and interest on long-term -60 -50 debt Net income 2514 835 (a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide? Please keep one decimal in the blank Maximum discount= 96 In this case, will you have a negative impact on the contribution margin ($) of the business? No • (b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the contribution margin?

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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