Question
Better Company and Not-so-Great Company are competitors. The following are their income statements. Better Company Not-so-Great Company Number of units 225 225 Sales revenue $
Better Company and Not-so-Great Company are competitors. The following are their income statements.
| Better Company | Not-so-Great Company | ||||||
| Number of units | 225 | 225 | |||||
| Sales revenue | $ | 30,000 | $ | 30,000 | |||
| Less variable costs | |||||||
| manufacturing | 4,000 | 10,000 | |||||
| selling | 2,000 | 8,000 | |||||
| Contribution margin | $ | 24,000 | $ | 12,000 | |||
| Less fixed costs | |||||||
| manufacturing | 10,000 | 3,000 | |||||
| selling | 9,000 | 4,000 | |||||
| Net income | $ | 5,000 | $ | 5,000 | |||
Required:
(a) Better Company believes that if it lowers its price to $135, it will increase its volume by 75 units. Prepare Better Companys Contribution Margin income statement based on 300 units IN GOOD FORM.
(b) What is the product cost per unit for Better Company assuming 350 units?
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Intermediate Accounting
Authors: James D. Stice, Earl K. Stice, Fred Skousen
16th Edition
324376375, 0324375743I, 978-0324376371, 9780324375749, 978-0324312140
