Robert shares the following information with you, as you ponder different scenarios to help your friend. Selling price Cost for paper, per unit Cost for printing, per unit Cost for film, per unit Staff salaries Other operating costs 1. 2. 3. $6.80 0.75 4. 0.90 After thinking about it for a while, you suggest the following possibilities to help him turn things around. 0.50 47,000 14,380 Lower the selling price by 10% to increase sales volume by 5%. Advertise on the radio and with social media, for a combined cost of $1,000, to increase volume by 10%. Use a more affordable paper on which to print the posters (available for $0.60 per unit), in combination with a less-expensive film to cover the top of the poster (available for $0.40 per unit). Instead of paying the salespeople a fixed salary, move to a commission-based compensation plan (save $19,000 in salary; incur $1.45 per unit sold commission), which should increase sales volume by 20%.
Robert shares the following information with you, as you ponder different scenarios to help your friend. Selling price Cost for paper, per unit Cost for printing, per unit Cost for film, per unit Staff salaries Other operating costs 1. 2. 3. $6.80 0.75 4. 0.90 After thinking about it for a while, you suggest the following possibilities to help him turn things around. 0.50 47,000 14,380 Lower the selling price by 10% to increase sales volume by 5%. Advertise on the radio and with social media, for a combined cost of $1,000, to increase volume by 10%. Use a more affordable paper on which to print the posters (available for $0.60 per unit), in combination with a less-expensive film to cover the top of the poster (available for $0.40 per unit). Instead of paying the salespeople a fixed salary, move to a commission-based compensation plan (save $19,000 in salary; incur $1.45 per unit sold commission), which should increase sales volume by 20%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please don't give image format
Transcribed Image Text:(a)
Analyze each of the proposals against the current situation to determine if it will help Robert achieve his profit goal. (Enter loss
using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answers to 2 decimal places, e.g.
5,125.25.)
Option 1
Option 2
Option 3
Option 4
Option 1
Option 2
$
Option 3
$
Show Transcribed Text
Option 4
$
$
After these initial discussions, Robert realizes that he has ignored any possible tax effects thus far. He estimates that his business
will be subject to a 25% tax rate. Will any of the proposed scenarios allow him to reach an after-tax income goal of $9,000? If so,
which one(s)? (Round answers to 2 decimal places, e.g. 5,125.25.)
$
Operating Income
After-Tax Operating Income Reach After-Tax Income Goal?
$
$
$
-7944.75
3853.50
0
6231
No
Ĉ
No v
No
No
Transcribed Image Text:Robert shares the following information with you, as you ponder different scenarios to help your friend.
Selling price
Cost for paper, per unit
Cost for printing, per unit
Cost for film, per unit
Staff salaries
Other operating costs
1.
2.
3.
$6.80
4.
0.75
0.90
After thinking about it for a while, you suggest the following possibilities to help him turn things around.
0.50
47,000
14,380
Lower the selling price by 10% to increase sales volume by 5%.
Advertise on the radio and with social media, for a combined cost of $1,000, to increase volume by 10%.
Use a more affordable paper on which to print the posters (available for $0.60 per unit), in combination with a less-expensive
film to cover the top of the poster (available for $0.40 per unit).
Instead of paying the salespeople a fixed salary, move to a commission-based compensation plan (save $19,000 in salary;
incur $1.45 per unit sold commission), which should increase sales volume by 20%.
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