**Sales revenue from product X is $9,000, variable costs are $6,000, and allocated fixed costs are $4,500. If you drop product X in the short term, profit will:**- ○ decrease by $1,500- ○ decrease by $5,250- ○ increase by $3,000- ○ increase by $1,500- ○ decrease by $3,000

Change in profit = New profit - Old profit Fixed cost doesn't change even if the product X is…

Answered: Sales revenue from product X is $9,000,…

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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Assume the following information: Amount Per Unit Sales $ 600,000 $ 40 Contribution margin $ 360,000 $ 24 Net operating income $ 240,000 If the selling price per unit increases by 8% and unit sales drop by 6%, then the best of estimate of the new net operating income is: Multiple Choice $263,520. $243,520. $253,520. $233,520.
Ajani Company has variable costs equal to 40% of sales. The company is considering a proposal that will increase sales by $10,000 and total fixed costs by $6,000. By what amount will net income increase? A. $6,000 B. $4,000 C. $2,000 D. $0
PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to b a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 Contribution margin P500,000 [300,000) 200,000 (125,000) 75,000 ( 30,000) P 45,000 Less: Fixed costs Income before taxes Less: Income taxes Net income 4. If the company wants a 20% before-tax return on sales, what level of sales, in pesos, does it need? 5. If the company wants a P60,000 after-tax profit, how many units must it sell? 6. If the company wants an after-tax return on sales of 10.5%, how many units must it sell?
PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to b a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 Contribution margin P500,000 [300,000) 200,000 (125,000) 75,000 ( 30,000) P 45,000 Less: Fixed costs Income before taxes Less: Income taxes Net incom 7. If the company wants an after-tax profit of P60,000 on its expected sales volume of 20,000 units, what price must it charge? 8. The company is considering offering its salespeople a 5% commission on sales. What would the total sales, in pesos, have to be in order to implement the commission plan and still earn the planned before-tax income of P75,000? 9. If the company wants its before tax profit higher than the planned P75,000 by P15,000, compute the required increase in peso sales.
A product sells for $30 per unit and has variable costs of $18.00 per unit. The fixed costs are $960,000. If the variable costs per unit were to decrease to $16.50 per unit, fixed costs increase to $1,080,000, and the selling price does not change, break-even point in units would: Multiple Choice O O Equal 6,000. Increase by 24,828. Not change. Increase by 4,000. Decrease by 24,828.
PROBLEM 6. After its cost structure (variable costs P15 per unit and monthly fixed costs of P125,000),as well as potential market, Babaero Company established what it considered to be a reasonable selling price. The company expected to sell 20,000 units per month and planned its monthly results as follows: Sales @P25 Less: Variable costs @P15 Contribution margin Less: Fixed costs P500,000 (300,000) 200,000 (125.000) 75,000 Income before taxes ( 30,000) P 45,000 Less: Income taxes Net income Requirements: On the basis of the preceding information, answer the following independent questions. 1. What is the break-even point in units? If the company determined that a particular advertising campaign had a high probability of increasing sales by 8,000 units, how much could it pay for such a campaign without reducing its planned profits? 3. If the company wants a P90,000 before-tax profit, how many units must it sell? 2
The company’s current selling price and variable cost per unit is P60 and 36 respectively. If the selling price is reduced by 5%, variable expenses reduced by P1.00, and fixed expenses increased to a total of P38,400, how many units would need to be sold to earn a net operating income of P21,000? 1,000 2,700 1,700 2,950
Assume your product is priced at $10.00. The variable cost per unit is currently S5.00, and fixed costs are $ 10.000. What is your breakeven point? C) a) 2.000 units () b) 3,000 units C c) 2.500 units d) 3,500 units
Trailblazer Company sells a product for $270 per unit. The variable cost is $110 per unit, and fixed costs are $1,056,000. Determine (a) the break-even point in sales units and (b) the break-even point in sales units if the company desires a target profit of $190,080. a. Break-even point in sales units fill in the blank 1 units b. Break-even point in sales units if the company desires a target profit of $190,080 fill in the blank 2 units

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Sales revenue from product X is $9,000, variable costs are $6,000, and allocated fixed costs are $4,500. If you drop product X in the short term, profit will: decrease by $1,500 O decrease by $5,250 O increase by $3,000 increase by $1,500 O decrease by $3,000