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. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement Gross sales Bad debt. Net sales COGS Contribution margin CM (%) SONA This year ($000) Last year ($000) 24718 25074 nil nil 24718 21,341 3377 25074 22,243 2831 11.3% 2.122 13.7% 2.067
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. There current sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement Gross sales Bad debt. Net sales COGS Contribution margin CM (%) SONA This year ($000) Last year ($000) 24718 25074 nil nil 24718 21,341 3377 25074 22,243 2831 11.3% 2.122 13.7% 2.067
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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. There current
sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company.
Polymerco Income Statement
Gross sales
Bad debt
Net sales
COGS
Operating income
Other income and interest on long-
term debt
Net income
No
Contribution margin
CM(%)
SG&A
%
This year ($000) Last year ($000)
25074
24718
nil
nil
25074
22,243
2831
11.3%
2,122
709
-60
24718
21,341
3377
649
1260
(a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide?
Maximum discount-
In this case, will you have a negative impact on the profitability of the business?
13.7%
2,067
1310
-50
(b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the profitability?
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fac92dbf6-898b-4a56-aeb2-f055afd4d544%2F6e6318b6-fa57-4a4d-8131-9fd452162db1%2Fs3mw56e_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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. There current
sales are to North American customers only. The president casually mentions that it would be nice to have more offshore sales to diversity the company.
Polymerco Income Statement
Gross sales
Bad debt
Net sales
COGS
Operating income
Other income and interest on long-
term debt
Net income
No
Contribution margin
CM(%)
SG&A
%
This year ($000) Last year ($000)
25074
24718
nil
nil
25074
22,243
2831
11.3%
2,122
709
-60
24718
21,341
3377
649
1260
(a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide?
Maximum discount-
In this case, will you have a negative impact on the profitability of the business?
13.7%
2,067
1310
-50
(b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the profitability?
0
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