Your answer is incorrect.As manager of the production department, Raul is concerned about increasing direct materials costs. Last year's profit of $35,400resulted from sales of 5,000 units at a selling price of $130. Total fixed costs were $214,600. This year, the company expects bothoverall sales volume and variable costs per unit to increase by 5%. With no other changes expected, how much will the company'sincome increase or decrease compared to last year as a result of these changes? (Round per unit costs and final answer to 2 decimal places,e.g. 5,125.25.)Company's incomeincreasedくby $12500eTextbook and Media

Last Year's Revenue = Sales unit x Price= 5,000 × 130= 650,000 Total VC = Revenue − FC - Profit=…

Answered: Your answer is incorrect. As manager of…

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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International Data Systems' information on revenue and costs is relevant only up to a sales volume of 121,000 units. After 121,000 units, the market becomes saturated and the price per unit falls from $10.00 to $6.80. Also, there are cost overruns at a production volume of over 121,000 units, and variable cost per unit goes up from $5.00 to $5.25. Fixed costs remain the same at $71,000. a. Compute operating income at 121,000 units. b. Compute operating income at 221,000 units.
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Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $27,520 and variable expenses of $6,880. Product Y45E had sales of $31,160 and variable expenses of $17,138. The fixed expenses of the entire company were $23,600. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company: Multiple Cholce would decrease. would Increase. could Increase or decrease. would not change.
Distinguish between financial and nonfinancial transactions. Give three examples of each.
Sphrantzes Company recently sold 175 units at a price of $650 per unit. During the same time the company reported total variable costs of $85,575 and net income of $13,975. If the company's price per unit were decreased by $35, its volume increased by 20 units and its fixed costs increased by $1,000, what would be the company's projected net income?
Sue Bee Honey is one of the largest processors of its product for the retail market. Assume that one of its plants has annual fixed costs totaling $16,317,500, of which $5,250,500 is for administrative and selling efforts. Sales are anticipated to be 950,000 cases a year. Variable costs for processing are $35 per case, and variable selling expenses are 10% of selling price. There are no variable administrative expenses If the company desires a pretax profit of $9,000,000, what is the selling price per case?
Compute total and average costs Fizzy Cola spends $1.00 on direct materials, direct labor and variable manufacturing overhead for every unit (a 12 pack of soda) that it produces. Fixed manufacturing overhead costs $5 million per year. The plant, which is currently operating at only 75% of capacity, produced 20 million units this year. Management plans to operate closer to full capacity next year, producing 25 million units. Management doesn’t anticipate any changes in the prices it pays for materials, labor, and manufacturing overhead. What is current total product cost for the 20 million units including fixed and variable costs? What is the current average product cost per unit? What is the current fixed cost per unit? What is the forecasted total product cost next year (for the 25 million units?) Why does the average product cost decrease as production increases? What is the forecasted average product cost next year? What is the forecasted fixed cost per unit?
The Sizemore Company recently sold 2,500 units for $100 each; reported total variable costs of $162,500 and a net income of $47,500. If the company's price per unit increased by $5 and its volume decreased by 250 units, what would be the company's net income?
Booth Company had sales in 2020 of $2,030,000 on 81,200 units. Variable costs totaled $1,218,000 and fixed costs totaled $485,000.A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $125,000. Management feels that two-thirds of the decline in the variable costs per unit should be passed on to customers in the form of a sales price reduction. The marketing department expects that this sales price reduction will result in a 4% increase in the number of units sold. Before Booth Company had the chance to implement usage of the new raw material, new industry specifications were announced and result in the following changes for the Booth Company. Variable costs will increase by 15% per unit and fixed costs will increase by $46,000. Management feels that a $3 per unit price increase is needed to accommodate the cost increases. However, this will result in a 10%…
Burgandy Manufacturing produces a single product that sells for $100. Variable costs per unit equal $40. The company expects total fixed costs to be $80,000 for the next month at the projected sales level of 2300 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. What is the current breakeven point in terms of number of units? (Round the final calculation up to the next whole number.) O A. 800 units OB. 1227 units O C. 1334 units OD. 2000 units
Perusall Chalmers Corporation operates in multiple areas of the globe, and relatively large price changes are common. Presently, the company sells 105,600 units for $50 per unit. The variable production costs are $20, and fixed costs amount to $2,079,000. Production engineers have advised management that they expect unit labor costs to rise by 10 percent and unit materials costs to rise by 15 percent in the coming year. Of the $20 variable costs, 25 percent are from labor and 50 percent are from materials. Variable overhead costs are expected to increase by 20 percent. Sales prices cannot increase more than 12 percent. It is also expected that fixed costs will rise by 10 percent as a result of increased taxes and other miscellaneous fixed charges. The company wishes to maintain the same level of profit in real dollar terms. It is expected that to accomplish this objective, profits must increase by 8 percent during the year. Saved Required: a. Compute the volume in units and the dollar…
Grover's Steel Parts produces parts for the automobile industry. The company has monthly fixed expenses of $610,000 and a contribution margin of 75% of revenues. Grover feels like he's in a giant squeeze play: The automotive manufacturers are demanding lower prices, and the steel producers have increased raw material costs. Grover's contribution margin has shrunk to 45% of revenues. The company's monthly operating income, prior to these pressures, was $162,500.

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