Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

PLEASE ANSWER ALL PARTS TO THE QUESTION. THANK YOU! Pet Haven Pty Ltd distributes a high-quality dog house that sells for $50 per unit. Variable

image text in transcribed

PLEASE ANSWER ALL PARTS TO THE QUESTION. THANK YOU!

Pet Haven Pty Ltd distributes a high-quality dog house that sells for $50 per unit. Variable expenses are $15 per unit, and fixed expenses total $448,000 per year. Its operating results for last year were as follows: Sales $800,000 Variable expenses 240,000 Contribution margin 560,000 Fixed expenses 448,000 Net operating income $112,000 Required: Answer each question independently based on the original data: 1. Determine the break-even point in dollar sales. (1 mark) 2. Assume this year's unit sales and total sales increase by 2,000 units and $100,000, respectively. If the fixed expenses do not change, how much will net operating income increase? (1 mark) 3. Assume the president expects this year's unit sales to increase by 15%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the company realise this year? How much would this increase be in dollars? (2 marks) 4. The sales manager is convinced that a 5% reduction in the selling price, combined with a $52,000 increase in advertising, would increase this year's unit sales by 25%. What would be this year's net operating income if his ideas are implemented? (1 mark)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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 Cases An Active Learning Approach

Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt

2nd Edition

9781266566899

Students also viewed these Accounting questions