Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $61. What would happen

Kylie's Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $61. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 25 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesn't increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.

Round your answers to two decimal places. Round break-even units to a whole number.

Selling Price, Variable Cost and Fixed Cost Change Analysis
With Current Price With Decreased VC and Increased FC With Increased SP, Decreased VC, and Increased FC
Sales Price per Unit $1.75 _________ ________
Variable Cost per Unit 0.30 _________ ________
Contribution Margin per Unit $1.45 _________ ________
Fixed Costs $435 _________ ________
Break-even in Units 300 _________ _________
Break-even in Dollars $525 _________ _________

Monthly Contribution Margin Income Statement
With Current Price With Decreased VC and Increased FC With Increased SP, Decreased VC, and Increased FC
Unit Sales, Expected 800 _________ __________
Sales __________ __________ __________
Variable Costs __________ __________ __________
Contribution Margin __________ __________ __________
Fixed Costs __________ __________ __________
Net Income

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

Auditing And Assurance Services An Integrated Approach

Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley

11th Edition

0131867121, 978-0131867123

More Books

Students also viewed these Accounting questions