Question
Europa Publications, Inc., specializes in reference books that keep abreast of the rapidly changing political and economic issues in Europe. The results for the companys
Europa Publications, Inc., specializes in reference books that keep abreast of the rapidly changing political and economic issues in Europe. The results for the companys operations during the companys last full year of operations, 2022, are indicated below. (Ignore Income taxes.)
Sales revenue $1,800,000
Fixed Manufacturing costs $500,000
Variable manufacturing costs $1,000,000
Fixed selling costs $50,000
Variable selling costs $100,000
Fixed Administrative costs $120,000
Variable administrative costs $30,000
Suppose in 2023, Europas sales revenue doubles relative to 2022. Also suppose its variable costs in 2023 change so that variable costs as a fraction of 2023 sales is of what it was in 2022. What changes have to occur in Eurpoas 2023 total fixed costs so that it has the same 2023 income under direct costing as it had in 2022?
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