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 casuall mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719

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 casuall mentions that it would be nice to have more offshore sales to diversity the company. Polymerco Income Statement This year ($000) Last year ($000) Gross sales 26507 24177 Bad debt nil nil Net sales 26507 24177 COGS 22,243 21,341 Contribution margin 4264 2836 CM(%) 16.1% 11.7% SG&A 2,122 2,067 Operating income 2142 769 Other income and interest on long-term -60 -50 debt Net income 2082 719

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.4E

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Concept explainers

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.

Question

(a) if Polymerco's production is running at 84% capacity, what is the maximum discount in percentage that you can provide?

Maximum discount= in %

In this case, will you have a negative impact on the profitability of the business? (yes or no)

(b) if Polymerco's production is running at 100% capacity, how much percentage of discount can you provide without reducing the profitability? (in %)

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
This year ($000)
Last year ($000)
Gross sales
26507
24177
Bad debt
nil
nil
Net sales
26507
24177
COGS
22,243
21,341
Contribution margin
4264
2836
CM(%)
16.1%
11.7%
SG&A
2,122
2,067
Operating income
2142
769
Other income and interest on long-term
-60
-50
debt
Net income
2082
719

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