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Marchete Company produces a single product. They have recently received the results of a market survey that indicates that they can increase the retail price of their product by 8% without losing customers or market share. All other costs will remain unchanged. Their most recent CVP analysis is shown. If they enact the 8% price increase, what will be their new break-even point in units and dollars?
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- Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics. Sales price $ 450.00 per unit Variable costs 210.00 per unit Fixed costs 764,000 per year Assume that the projected number of units sold for the year is 4,750. Consider requirements (b), (c), and (d) independently of each other. What will the operating profit be? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? Suppose that fixed costs for the year are 20 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?arrow_forwardIn the upcoming year, NUBD estimates that it will produce and sell 4,000 units. The variable costs per unit and the total fixed costs are expected to be the same as in the current year. However, it anticipates a sales price of P16 per unit. What is Value Pro's projected margin of safety for the coming year?arrow_forwardTennis Products, Inc., produces three models of high-quality tennis rackets. The following table contains recent information on the sales, costs, and profitability of thethree models: The company is considering lowering the price of Model A to $27 in an effort toincrease the number of units sold. Based on the results of price changes that havebeen instituted in the past, Tennis Products’ chief economist estimates the arc priceelasticity of demand to be 2.5. Furthermore, she estimates the arc cross elasticity ofdemand between Model A and Model B to be approximately 0.5 and between ModelA and Model C to be approximately 0.2. Variable costs per unit are not expected tochange over the anticipated changes in volume.a. Evaluate the impact of the price cut on the (i) total revenue and (ii) contributionmargin of Model A. Based on this analysis, should the firm lower the price ofModel A?b. Evaluate the impact of the price cut on the (i) total revenue and (ii) contributionmargin for the entire…arrow_forward
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- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College