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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):
- 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)
- 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)
- 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)
- 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
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