Anderson Metals manufactures and sells #3 steel rebar that is used in the construction of slabs and driveways. The steel bar not only strengthens the finished concrete product, but it also has unique properties such that its temperature related expansion and contraction matches that of concrete. The product is manufactured and sold in 20 long "sticks." The product is generally produced and sold to match customer demand, and there is not a significant amount of finished goods inventory at any point in time. Summary information for 2020 is as follows: Sales were $30,000,000, consisting of 5,000,000 sticks. Total variable costs were $18,000,000. Total fixed costs were $10,000,000. Net income was $2,000,000. The general economic conditions appear to be deteriorating heading into 2021, and there is some concern about a reduction in sales volume. The following questions should each be answered independent of one another. DO NOT ANSWER THE QUESTIONS ON THIS SHEET. USE THE WORKSHEET TAB TO ANSWER THE QUESTIONS. An income statement must be presented for each scenario to receive credit! What is the company's break even point in "sicks'?" 1) What would be their net income or not lows if volume is reduced by 2517 2) Can The comparry sustain a 2516 reduction in total volume, and remain profitable? The company's sole shareholder, Doug Anderson, generaly lives off of dividends paid by The business The business lypicaly declares and pays a dividend equal to $150,000 for Doug's normal living exportes Doug is demanding a $56,000 increase in dividends for 2021. What total sakes vol Farsi Anderson Metals produce in 2021 to accomodate the incuisine in dividends andin itain For some net income? if lidl volone is expected to decrease by 20%, and the company wishes to continge In reduce a $2,000 003 not income by raising ho par unit soling price, I) what revised por slick price mand be imposed? ?) Wil this sixdogy necessarily work? If the company tigacts a drop in raw material prices to reduce told variable costs to $2 75 por stick, but all other revenue and cost lackirs to be unalloctod, what wil be the named brook -even point in sales and unity? Hint All quertions fire weighted equaly. There are two bottom in part B and part D. Make sure you answer ail questions to maximize points. Hint Question #2 in part D is a marketing question, The accountants in part D wil say "rake the price", but how would you react if you wore the marketing asport on the management foam?Volang Unit Sales 5,000 000 6.00 30,000,000 Variable Costs Contribution Margin Food Costs Net Income Use the income statement you prepared in(@) above to answer the question; What is the company's breakcaven point in sticks? (b) Use the income statement you prepared in (b) shove to answer the question: What would be their net income or not loss if volume is reduced by 25%? Use the income statement you prepared in (b)Isbove to answer the question: Can the company sustain a 25% reduction in total volume, and remain profitable? Use the income statement you prepared in (c) above to answer the question: What total sales volume must Anderson Metals produce in 2021 to accomodate the increase in dividends and maintain the same not income? (d) Use the income statement you prepared in (d) above to answer the question: what revised per stick price must be imposed? Use the income statement you prepared in (d) shove to answer the question Will this Strategy necessarily work? Use the income statement you prepared in (@) above to answer the question: what will be the revised break-even point in sales and units
