=+The May income statement reported that sales were not meeting expectations. For the first five months of

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=+The May income statement reported that sales were not meeting expectations. For the first five months of the year, only 350 units had been sold at the established price, with variable costs as planned, and it was clear that the net profit after tax projection for 2015 would not be reached unless some actions were taken. A management committee presented the following mutually exclusive alternatives to the president:

Chapter 4: Cost–volume–profit analysis 161 M04_HORN3377_02_LT_C04.indd 161 2/09/13 3:22 PM a Reduce the selling price by $40. The sales organisation forecasts that at this significantly reduced price, 2700 units can be sold during the remainder of the year. Total fixed costs and variable cost per unit will stay as budgeted.

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Cost Accounting A Managerial Emphasis

ISBN: 9781442563377

2nd Edition

Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan

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