Question
Hello! I am looking for help to find changes in net operating income: Info: Sales (13,300 units $20 per unit)$266,000 Variable expenses159,600 Contribution margin106,400 Fixed
Hello! I am looking for help to find changes in net operating income:
Info:
Sales (13,300 units $20 per unit)$266,000
Variable expenses159,600
Contribution margin106,400
Fixed expenses118,400
Net operating loss$(12,000)
CM Ratio: 40%
Break even point in unit sales: 14,800
Break even point in dollar sales: 296,000
Situation 1:The president believes that a $6,700 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in an $83,000 increase in monthly sales. If the president is right, what will be the increase (decrease) in the company's monthly net operating income?
Situation 2: Refer to the original data. The sales manager is convinced that a 10% reduction in the selling price, combined with an increase of $40,000 in the monthly advertising budget, will double unit sales. If the sales manager is right, what will be the revised net operating income (loss)?
Situation 3:Refer to the original data. The Marketing Department thinks that a fancy new package for the laptop computer battery would grow sales. The new package would increase packaging costs by $0.60 per unit. Assuming no other changes, how many units would have to be sold each month to attain a target profit of $4,000?
Unit sales to attain target profit?
Please and thank you!!
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