ALPINE, INC. Income Statement For the ar Ended June 0.ao13. Sales (40,000 units at S12 cost of goods sold rect materials Manufacturing overhead. operating expenses: ng expenses Variables $38.00 Sales commissions Fixed (advertising- Administrative expenses Variable (billing, other) Fixed (salaries, other) All variable expenses in the units sold, except for sales commissions which are based on sales dollars. Variable manufacturing ove 50 cents per unit. The company's plant has a capacity of units. Several disappointed with 01& operating results. possible courses of action are being studied to determine what should be done to make 2013 profitable. Redo Alpine, saola statement in the contribution format. Inc.'s Required 1. a total column and a per unit column on your statement. Leave enough space to the right of your numbers to enter the solution to both parts of 2) 2. In an effort to makea00 profitable, the president is considering two proposals prepared by members of her staff reduce the unit selling price by 25 percent. a. The sales manager would like to He is that this would fill the plant to b. executive vice president would like to increase the unit selling price by 25 percent, increase the sales of sales, increase advertising by $90,000. Based on experience in another company he is confident this would trigger a 50 percent increase in unit sales. epare two contribution income statements, one showing what profits be under the sales manager's proposal and one showing what profits would be under the vice president's proposal. On each statement, include both total and 3. Refer to columns (do not show per unit data for the fixed costs). to change the the original The president thinks it would be unwise manufacturing selling price. Instead, she wants to use less costly materials in units of product, thereby reducing costs by $1.73 per unit. How many units would have to be sold duringtol2 to earn a target profit of $59,000 for the year? 4. Refer to the original data. Alpine, Inc.'s advertising agency thinks that the problem lies in inadequate promotion. By how much can advertising be in- creased and still allow the company to earn a target return of 4.5 percent on sales of 60,000 units? overseas Refer to the original data. The company has been approached by an distributor who wants purchase 15,000 units on a special price basis. There would be no sales commission on these units. However, shipping costs would be increased by 80 percent, and variable administrative costs would be reduced by 50 percent. Alpine, Inc., would have to pay a foreign import duty of S3,150 on behalf of the overseas distributor in order to get the goods into the country Given these data, what unit price would have to be quoted on the 15.000 units by Alpine, Inc., to allow the company to earn a profit of s18,000 total operar tions? Regular business would not be disturbed by this special order ALPINE, INC. Income Statement For the ar Ended June 0.ao13. Sales (40,000 units at S12 cost of goods sold rect materials Manufacturing overhead. operating expenses: ng expenses Variables $38.00 Sales commissions Fixed (advertising- Administrative expenses Variable (billing, other) Fixed (salaries, other) All variable expenses in the units sold, except for sales commissions which are based on sales dollars. Variable manufacturing ove 50 cents per unit. The company's plant has a capacity of units. Several disappointed with 01& operating results. possible courses of action are being studied to determine what should be done to make 2013 profitable. Redo Alpine, saola statement in the contribution format. Inc.'s Required 1. a total column and a per unit column on your statement. Leave enough space to the right of your numbers to enter the solution to both parts of 2) 2. In an effort to makea00 profitable, the president is considering two proposals prepared by members of her staff reduce the unit selling price by 25 percent. a. The sales manager would like to He is that this would fill the plant to b. executive vice president would like to increase the unit selling price by 25 percent, increase the sales of sales, increase advertising by $90,000. Based on experience in another company he is confident this would trigger a 50 percent increase in unit sales. epare two contribution income statements, one showing what profits be under the sales manager's proposal and one showing what profits would be under the vice president's proposal. On each statement, include both total and 3. Refer to columns (do not show per unit data for the fixed costs). to change the the original The president thinks it would be unwise manufacturing selling price. Instead, she wants to use less costly materials in units of product, thereby reducing costs by $1.73 per unit. How many units would have to be sold duringtol2 to earn a target profit of $59,000 for the year? 4. Refer to the original data. Alpine, Inc.'s advertising agency thinks that the problem lies in inadequate promotion. By how much can advertising be in- creased and still allow the company to earn a target return of 4.5 percent on sales of 60,000 units? overseas Refer to the original data. The company has been approached by an distributor who wants purchase 15,000 units on a special price basis. There would be no sales commission on these units. However, shipping costs would be increased by 80 percent, and variable administrative costs would be reduced by 50 percent. Alpine, Inc., would have to pay a foreign import duty of S3,150 on behalf of the overseas distributor in order to get the goods into the country Given these data, what unit price would have to be quoted on the 15.000 units by Alpine, Inc., to allow the company to earn a profit of s18,000 total operar tions? Regular business would not be disturbed by this special order
