Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kelly Companys most recent contribution format income statement is shown below: Total Per Unit Sales (50,000 units) $ 700,000 $ 14 Variable costs 300,000 6

Kelly Companys most recent contribution format income statement is shown below:

Total

Per Unit

Sales (50,000 units)

$

700,000

$

14

Variable costs

300,000

6

Contribution margin

400,000

$

8

Fixed costs

240,000

Operating income

$

160,000

Required:

Prepare a new contribution format income statement with a per unit column under each of the following conditions (consider each case independently):

  1. The selling price increases by $1 per unit, fixed costs increase by $20,000, and the number of units sold decreases by 10%. Would this change be beneficial to the company? Briefly explain. ( 4 marks)
  1. Return to the original data. Variable costs increase by 60 cents per unit, the selling price increases by 15%, and the number of units sold decreases by 15%. Would this change be beneficial to the company? Briefly explain. ( 4 marks)

  1. Return to the original data. The selling price decreases by $2 per unit, fixed costs decrease by $30,000, and the variable costs per unit increases by 10%. Would this change be beneficial to the company? Briefly explain. ( 4 marks)

  1. Return to the original data. The number of units sold decreases by 5%, fixed costs increase by 10%, and the variable costs per unit decreases by $4 per unit. Would this change be beneficial to the company? Briefly explain. ( 4 marks)

i need this answer as soon as possible please

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_2

Step: 3

blur-text-image_3

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 Accounting Theory

Authors: Craig Deegan

3rd Edition

0070277265, 978-0070277267

More Books

Students also viewed these Accounting questions

Question

Summarise the scope of HRM and the key HRM functions

Answered: 1 week ago