Wendle Corp. produces memory enhancement kits for DVR machines. Sales have been very erratic, with some months showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (30,000 units at $20 per unit) $600,000 Variable expenses 300,000 Contribution margin (CM) 300,000 Fixed expenses 400,000 Net operating loss $ (10,000) Refer to the original data. The company's advertising agency thinks that a new package would help sales. The new package being proposed would increase packaging costs by $1.00 per unit. Assuming no other changes, how many units would have to be sold each month to earn an after-tax profit of $25,000? Wendle’s tax rate is 25 percent.

Wendle Corp. produces memory enhancement kits for DVR machines. Sales have been very erratic, with some months showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (30,000 units at $20 per unit) $600,000 Variable expenses 300,000 Contribution margin (CM) 300,000 Fixed expenses 400,000 Net operating loss $ (10,000) Refer to the original data. The company's advertising agency thinks that a new package would help sales. The new package being proposed would increase packaging costs by $1.00 per unit. Assuming no other changes, how many units would have to be sold each month to earn an after-tax profit of $25,000? Wendle’s tax rate is 25 percent.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 2TIF

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