Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 6.30 p per unit. Fixed costs are expected to amount

Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 6.30 p per unit. Fixed costs are expected to amount to 53,000 p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 2.00 p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 12 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentinas national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentinas peso was worth $0.104 U.S. dollar.)

1. Suppose management alters its current plans by spending an additional amount of 4,500 p on advertising and increases the selling price to 7.30 p per unit. Calculate the profit on 62,000 units

2. The Sorde Company has just approached Corrientes to make a special one-time purchase of 13,000 units. These units would not be sold by the sales personnel, and, therefore, no commission would have to be paid. What is the price Corrientes would have to charge per unit on this special order to earn additional profit of 37,700 p?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial and Managerial Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

12th edition

978-1133952428, 1285078578, 1133952429, 978-1285078571

Students also viewed these Accounting questions

Question

x4 - 2x - 8x Consider the function f(x) = x3 + 2x

Answered: 1 week ago