and margin to cover orden, manager of the Miami office has come to you for advice Sherco cot average about Los of revenue at current price sidering price reduction that she expects to add considerably to un volume but unsure of the effects on profit. She begins by showing you an income statement the reflects her expectations for the coming year without the price reduction Miami Office Budgeted Income Statement for 20X2 Sales Cost of sales 52.OO.OOO 1.200,000 Gross margin $ 1.200.000 Salaries and commissions $400,000 Rent, uties, insurance 86.000 Home office charge 192.000 768.000 Profit 42.000 Holden believes that it is possible to obtain the following increase volume given the associated decreases in selling prices Decrease in Increase in Unit Price Volume 10 Holden tells you that the only variable costs of running the office are the 15% bom missions that salespeople can. Of course, her cost of sales is variable because it depends on unit volume, as is the home office charge because it depends on total revenue. Holdon is evaluated on the profit that her office generates. Required: 2. Determine whether Holden should reduce prices and if so, by how much 2 Using the guidelines in Appendix A. write a memorandum to Ms. Holden giving and supporting your recommendation about which action thold prices reduce prices by 536, reduce prices by 10%) is in Worcester's best interests Weldon Oil Company operates a refinery in the northeastern United States. During the winter about 200 workers are employed as drivers of fuelos trucks to deliver oil for heating purposes. Drivers are paid $10 per hour. During the summer there is no need for their services as fuel oil truck drivers and they are given jobs in the refin ery. These refinery jobs pay only $7 per hour. However, company policy to pay drivers their usual $10 rate- The refinery manager is charged with the $10 wage paid to the drivers while they work in the refinery. The manager of fuel oil distribution bears no charge except -52 med and when the workers are delivering fuel oil. The refinery manager does not object to employing the drivers during the summer. Even with this addition to his regular work force he must hire students and other temporary employees in the summer. He does, however, object to the $10 charge in the summer, because he can obtain equally qualified for those jobs) workers at $7 per hour and he must use the drivers as a matter of company policy. Required: Using the guidelines in Appendix A. write a memorandum to Ms. Cohen, Weldon's and recommending an alternative approach for assigning the charges for drivers controller pointing out the problems by the firm's present cost-assignment policies wages during the summer. and margin to cover orden, manager of the Miami office has come to you for advice Sherco cot average about Los of revenue at current price sidering price reduction that she expects to add considerably to un volume but unsure of the effects on profit. She begins by showing you an income statement the reflects her expectations for the coming year without the price reduction Miami Office Budgeted Income Statement for 20X2 Sales Cost of sales 52.OO.OOO 1.200,000 Gross margin $ 1.200.000 Salaries and commissions $400,000 Rent, uties, insurance 86.000 Home office charge 192.000 768.000 Profit 42.000 Holden believes that it is possible to obtain the following increase volume given the associated decreases in selling prices Decrease in Increase in Unit Price Volume 10 Holden tells you that the only variable costs of running the office are the 15% bom missions that salespeople can. Of course, her cost of sales is variable because it depends on unit volume, as is the home office charge because it depends on total revenue. Holdon is evaluated on the profit that her office generates. Required: 2. Determine whether Holden should reduce prices and if so, by how much 2 Using the guidelines in Appendix A. write a memorandum to Ms. Holden giving and supporting your recommendation about which action thold prices reduce prices by 536, reduce prices by 10%) is in Worcester's best interests Weldon Oil Company operates a refinery in the northeastern United States. During the winter about 200 workers are employed as drivers of fuelos trucks to deliver oil for heating purposes. Drivers are paid $10 per hour. During the summer there is no need for their services as fuel oil truck drivers and they are given jobs in the refin ery. These refinery jobs pay only $7 per hour. However, company policy to pay drivers their usual $10 rate- The refinery manager is charged with the $10 wage paid to the drivers while they work in the refinery. The manager of fuel oil distribution bears no charge except -52 med and when the workers are delivering fuel oil. The refinery manager does not object to employing the drivers during the summer. Even with this addition to his regular work force he must hire students and other temporary employees in the summer. He does, however, object to the $10 charge in the summer, because he can obtain equally qualified for those jobs) workers at $7 per hour and he must use the drivers as a matter of company policy. Required: Using the guidelines in Appendix A. write a memorandum to Ms. Cohen, Weldon's and recommending an alternative approach for assigning the charges for drivers controller pointing out the problems by the firm's present cost-assignment policies wages during the summer