8 section D D $376,200 8 (14 points) The following monthly data are available for the Challenger Company and its only product, Product SW units Sales Value II Sales price Vocokie Expen Total Per Unit Sales (400 unit) $110,000 $275 Variable expenses Contribution margin Fixed espenses Net operating income$13,200 44 000 66,000 $165 Fxed Cost meer un Required a Without resorting to calculations, what is the total contribution margin at the break even point $52,800 same as fixed cost 75 1 Revised Var abe b Management is contemplating the use of plastic gearing rather than metal gearing in Product SW This change would reduce variable costs by $15 CM SISO The company'sn marketing manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 350 units per month Should this change be made S180 350 $63 000, bad deal as were already at $66 000 no c Assume that Challenger Company is currently selling 400 units of Product SW per Revised of month Management wants to increase sales and feels this can be done by cutting the selling price by $25 per uniCM down to S140 and increasing the advertising budget by hevised Conte la S20,000 per month Management believes that these actions will increase unit sales by 50 up to 600 Should these changes be made 6(X 140 SS400 less the additional advertising of S20K results in fixed cost of $72,800 and NOI of S11,200, don't do it a ,000 d Assume that Challenger Company is currently selling 400 units of Product SW Management wants to automate a portion of the production process for Product SW The new equipment would reduce direct labor costs by $20 per unit CM up to $185 but would result in a monthly rental cost for the new robotic equipment of S10,000 Management believes that the new equipment will increase the reliability of Product SW thus resulting in an increase in monthly sales of 12 400 12 448 Should these changes be made 448 $185 82880 10,000 72880 versus S66,000 do it 9 (3 points) On a cost volume profit graph, the revenue line will be shown above the total expense line for any activity level above the break even point True False 10 (3 points) The contribution margin ratio measures the effect on the total contribution margin of a given change in total sales True False

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8 section D D  $376,200 8  (14 points) The following monthly data are available for the Challenger Company and its only product, Product SW units Sales Value II Sales price Vocokie Expen Total Per Unit Sales (400 unit)   $110,000 $275 Variable expenses    Contribution margin  Fixed espenses Net operating income$13,200 44 000 66,000 $165 Fxed Cost  meer un Required  a  Without resorting to calculations, what is the total contribution margin at the break even point  $52,800 same as fixed cost 75 1 Revised Var abe b  Management is contemplating the use of plastic gearing rather than metal gearing in Product SW  This change would reduce variable costs by $15  CM SISO The company'sn  marketing manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 350 units per month  Should this change be made  S180  350 $63 000, bad deal as were already at $66 000 no c  Assume that Challenger Company is currently selling 400 units of Product SW per Revised of month  Management wants to increase sales and feels this can be done by cutting the selling price by $25 per uniCM down to S140 and increasing the advertising budget by hevised Conte la S20,000 per month  Management believes that these actions will increase unit sales by 50  up to 600  Should these changes be made  6(X 140 SS400 less the additional advertising of S20K results in fixed cost of $72,800 and NOI of S11,200, don't do it  a ,000 d  Assume that Challenger Company is currently selling 400 units of Product SW Management wants to automate a portion of the production process for Product SW  The new equipment would reduce direct labor costs by $20 per unit CM up to $185 but would result in a monthly rental cost for the new robotic equipment of S10,000  Management believes that the new equipment will increase the reliability of Product SW thus resulting in an increase in monthly sales of 12  400 12 448  Should these changes be made  448 $185 82880 10,000 72880 versus S66,000 do it 9  (3 points) On a cost volume profit graph, the revenue line will be shown above the total expense line for any activity level above the break even point  True False 10  (3 points) The contribution margin ratio measures the effect on the total contribution margin of a given change in total sales True False

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#8 section D D. $376,200 8. (14 points) The following monthly data are available for the Challenger Company and its only product, Product SW units

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