Question
Assuming the following: (i) the sales price for each CompuTech product sold is $50; (ii) each product sold costs $25 in Raw Material components; and
Assuming the following: (i) the sales price for each CompuTech product sold is $50; (ii) each product sold costs $25 in Raw Material components; and the business Fixed Cost is as determined in your Dec 31st, 2021 Income Statement.
Q1: What is the BE in units for CompuTech in 2021?
Q2: What impact would occur to the BE if the variable cost of materials rose by 10% during the year?
Q3: If the overall market for computer products in CompuTechs market area is 3,000 units What share of the market does CompuTechs unit sales in 2021 represent?
Q4: If CompuTech were to hire a Sheridan student (annual cost for Part Time service $20,000 per year) to help in the marketing of CompuTech, what would the impact be on the companys BE?
Q5: If the Sheridan student could impact unit sales by 20% growth, would their hiring be justified? Explain.
Q6: With the following information for 2022 prepare a pro-forma Income Statement for the year ending December 31, 2022, and then, calculate CompuTechs (a) income before taxes, (b) contribution margin and (c) PV ratio.
RM Purchases:$205,000
Freight In: 4,000
Sales Salaries: 60,000
Commissions: 3,000
Travel: 3,000
Advertising: 5,000
Admin Salaries: 38,000
Revenue: 420,000
Depreciation: 40,000
Office leasing: 7,000
Finance Costs: 14,000
Income Taxes: 13,000
Q7: Assuming that the price per unit and the variable cost per unit have stayed the same as in calculations for 2021, what is the new BE in units for CompuTech in 2022? How does this compare to the BE in units for the previous year?
Q8: If the total market in the CompuTech market area had experienced a shrinking in units during the year (of 10%) should the Martins be concerned? Explain.
CompuTech's | ||||
Income Statement | ||||
for the year ending December 31, 2021 | ||||
Sales revenue | $ 350,000 | |||
Less: Cost of goods sold | $ 177,000 | |||
Gross margin | $ 173,000 | |||
Less: Operatng expenses | ||||
Sales salaries | $ 80,000 | |||
Advertising | $ 3,000 | |||
Travel | $ 2,000 | |||
Depreciation | $ 38,000 | |||
Sales Commission | $ 2,000 | |||
Operating income | $ 48,000 | |||
Less: Other expenses | ||||
Financing costs | $ 10,000 | |||
Income before tax | $ 38,000 | |||
Less: Income taxes | $ 13,000 | |||
Income after taxes | $ 25,000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started