Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Horton Manufacturing Inc. (HMI) IS Suffering from the effects of increased local and global competition for its main product, a lawn mower that is sold

image text in transcribed

Horton Manufacturing Inc. (HMI) IS Suffering from the effects of increased local and global competition for its main product, a lawn mower that is sold in discount stores throughout the United States. The following table shows the results of HMI's operations for 2019: Sales (12,500 units @ $84) Variable costs (12,580 @ $63) Contribution margin Fixed costs Operating profit (loss) $ 1,25e,eee 787, 580 $ 262,580 296, 100 $ (33,680) Required: 1. Compute HMI's breakeven point in both units and dollars. Also, compute the contribution margin ratio. 2. What would be the required sales, in units and in dollars, to generate a pretax profit of $30,000? 3. Assume an Income tax rate of 40%. What would be the required sales volume, In both units and dollars, to generate an after-tax profit of $30,000? 4. Prepare a contribution Income statement as a check for your calculations in requirement 3. 5. The manager believes that a $60,000 Increase in advertising would result in approximately a $200,000 Increase in annual sales. the manager is right, what will be the effect on the company's operating profit or loss? 6. Refer to the original data. The vice president in charge of sales feels that a 10% reduction in price in combination with a $40,000 Increase in advertising will cause unit sales to increases by 25%. What effect would this strategy have on operating profit (loss)? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Compute HMI's breakeven point in both units and dollars. Also, compute the contribution margin ratio. Breakeven point in units Breakeven point in dollars Contribution margin ratio

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Forensic And Investigative Accounting

Authors: Professor D. Larry Crumbley, Lester E. Heitger, G. Stevenson Smith

8th Edition

0808046241, 9780808046240

More Books

Students also viewed these Accounting questions

Question

=+b) What is the best choice using the expected-value approach?

Answered: 1 week ago