Akron Company is a relatively new firm that offers customers two products, Xum and Lotan Xum sells for $20 per unit and has a variable cost of $15 per unit Lotan sells for $50 per unit and has a variable cost of $40 per unit Akron has $110,000 of fixed costs and faces a 20 income tax rate Akron typically sells twice the number of units of Xum (product 1) as they do Lotan (product 2) The following questions relate to Akron Assume that customers typically only purchase a single unit of Xum or a single unit of Lotan (as would be the case for instance when a customer goes looking to buy a car or a personal computer) Which product would you encourage the sales representative to try to sell to customers Assume that customers typically buy multiple units of products and that almost all customers purchase at least $100 worth of products Also, assume that the products are very close substitutes (as would be the case if customers were looking to buy chocolates) Which product would you encourage the sales representative to try to sell to customers What is the breakeven point in terms of units of Xum and Lotan Assume that Akron could sell twice the number of units of Lotan as they do Xum How would this affect the number of sales dollars necessary to breakeven How many units of Xum and Lotan would have to be sold to achieve a target operating income of $15,000 How many units of Xum and Lotan would have to be sold to achieve a target net income of $24,000 How many units of Xum and Lotan would have to be sold to achieve a target net income equal to 8 of total sales Currently Akron's sales mix consists of selling 8,000 units of Xum and 16,000 units of Lotan Akron is considering reallocating $15,000 of advertising dollars from Lotan to Xum Furthermore, Akron is considering increasing their advertising budget by $7,000 and using the money to advertise Xum This combination of actions will result in a 40 increase in sales of Xum and a 4 decrease in sales of Lotan What impact will this have on operating income

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Akron Company is a relatively new firm that offers customers two products, Xum and Lotan. Xum sells for $20 per unit and has a variable

Akron Company is a relatively new firm that offers customers two products, Xum and Lotan.

Xum sells for $20 per unit and has a variable cost of $15 per unit. Lotan sells for $50 per unit and has a variable cost of $40 per unit. Akron has $110,000 of fixed costs and faces a 20% income tax rate. Akron typically sells twice the number of units of Xum (product 1) as they do Lotan (product 2). The following questions relate to Akron.

Assume that customers typically only purchase a single unit of Xum or a single unit of Lotan (as would be the case for instance when a customer goes looking to buy a car or a personal computer). Which product would you encourage the sales representative to try to sell to customers?
Assume that customers typically buy multiple units of products and that almost all customers purchase at least $100 worth of products. Also, assume that the products are very close substitutes (as would be the case if customers were looking to buy chocolates). Which product would you encourage the sales representative to try to sell to customers?
What is the breakeven point in terms of units of Xum and Lotan?
Assume that Akron could sell twice the number of units of Lotan as they do Xum. How would this affect the number of sales dollars necessary to breakeven?
How many units of Xum and Lotan would have to be sold to achieve a target operating income of $15,000?
How many units of Xum and Lotan would have to be sold to achieve a target net income of $24,000?
How many units of Xum and Lotan would have to be sold to achieve a target net income equal to 8% of total sales?
Currently Akron's sales mix consists of selling 8,000 units of Xum and 16,000 units of Lotan. Akron is considering reallocating $15,000 of advertising dollars from Lotan to Xum. Furthermore, Akron is considering increasing their advertising budget by $7,000 and using the money to advertise Xum. This combination of actions will result in a 40% increase in sales of Xum and a 4% decrease in sales of Lotan. What impact will this have on operating income?