{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-28T05:33:22-04:00", "answer_date": "2024-06-28 05:33:22", "is_docs_available": null, "is_excel_available": null, "is_pdf_available": null, "count_file_available": 0, "main_page": "student_question_view", "question_id": "4245427", "url": "\/study-help\/questions\/consolidated-industries-is-studying-the-addition-of-a-new-valve-4245427", "question_creation_date_js": "2024-06-28T05:33:22-04:00", "question_creation_date": "Jun 28, 2024 05:33 AM", "meta_title": "[Solved] Consolidated Industries is studying the a | SolutionInn", "meta_description": "Answer of - Consolidated Industries is studying the addition of a new valve to its product line. The valve would be used by manufa | SolutionInn", "meta_keywords": "consolidated,industries,studying,addition,new,valve,product,line,manufacturers,irrigation,equipment,company", "question_title_h1": "Consolidated Industries is studying the addition of a new valve to its product line. The valve would be used by manufacturers of irrigation equipment. The", "question_title": "Consolidated Industries is studying the addition of a new valve to its", "question_title_for_js_snippet": "Consolidated Industries is studying the addition of a new valve to its product line The valve would be used by manufacturers of irrigation equipment The company anticipates starting with a relatively low sales volume and then boosting demand over the next several years A new salesperson must be hired because Consolidated's current sales force is working at capacity Two compensation plans are under consideration Plan A An annual salary of $22,000 plus a 10 commission based on gross dollar sales Plan B An annual salary of $66,000 and no commission Consolidated Industries will purchase the valve for $50 and sell it for $80 Anticipated demand the first year is 6,000 units (Ignore income tax) 1 Compute the break even point for plan A and B 2 What does operating leverage mean 3 Analyze the costs structures of both plans at the anticipated demand of 6,000 units Which of the two plans has a higher operating leverage factor 4 Assume that a general economic downturn occurred during year 2, with product demand falling from 6,000 to 5,000 units Determine the percentage decrease in company net income if Consolidated had adopted Plan A 5 Repeat question 4 but substitute for Plan B Compare the results and explain a major factor that underlies any resulting differences 6 Briefly discuss the likely profitability impact of an economic recession for highly automated manufacturers What can you say about the risks associated with these firms", "question_description": "Consolidated Industries is studying the addition of a new valve to its product line. The valve would be used by manufacturers of irrigation equipment. The company anticipates starting with a relatively low sales volume and then boosting demand over the next several years. A new salesperson must be hired because Consolidated's current sales force is working at capacity. Two compensation plans are under consideration. Plan A: An annual salary of $22,000 plus a 10% commission based on gross dollar sales. Plan B: An annual salary of $66,000 and no commission. Consolidated Industries will purchase the valve for $50 and sell it for $80. Anticipated demand the first year is 6,000 units. (Ignore income tax) 1. Compute the break even point for plan A and B. 2. What does operating leverage mean? 3. Analyze the costs structures of both plans at the anticipated demand of 6,000 units. Which of the two plans has a higher operating leverage factor? 4. Assume that a general economic downturn occurred during year 2, with product demand falling from 6,000 to 5,000 units. Determine the percentage decrease in company net income if Consolidated had adopted Plan A. 5. Repeat question 4 but substitute for Plan B. Compare the results and explain a major factor that underlies any resulting differences. 6. Briefly discuss the likely profitability impact of an economic recession for highly automated manufacturers. What can you say about the risks associated with these firms", "transcribed_text": "", "related_book": { "title": "Entrepreneurial Finance", "isbn": "1305968352, 978-1337635653, 978-1305968356", "edition": "6th edition", "authors": "J. Chris Leach, Ronald W. Melicher", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/1482.jpg", "uri": "\/textbooks\/entrepreneurial-finance-6th-edition-1482", "see_more_uri": "" }, "free_related_book": { "isbn": "1582554625", "uri": "\/textbooks\/winston-and-kuhns-herbal-therapy-and-supplements-a-scientific-and-traditional-approach-2nd-edition-978-1582554624-269040", "name": "Winston And Kuhns Herbal Therapy And Supplements A Scientific And Traditional Approach", "edition": "2nd Edition" }, "question_posted": "2024-06-28 05:33:22", "see_more_questions_link": "\/study-help\/questions\/business-economics-2023-September-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/1-how-did-the-dallas-cowboys-use-information-visualization-2", "description": "1. How did the Dallas Cowboys use information visualization? 2. 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