Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer from #1 5a onwards, thank you. 1 Stratford Company distributes a lightweight lawn chair that sells for $30 per unit. Variable expenses are

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed Please answer from #1 5a onwards, thank you.

1 Stratford Company distributes a lightweight lawn chair that sells for $30 per unit. Variable expenses are 40% of sales, and fixed expenses total $313,200 annually. 10 points Required: Answer the following independent questions: 1. What is the product's CM per unit? eBook Contribution margin per unit Print References 2. Use the CM per unit to determine the break-even point in units. Break-even point in units 3. The company estimates that sales will increase by $50,000 during the coming year due to increased demand. By how much should net operating income increase? Increase in operating income 1 10 points 5-a. Refer to the original data. Assume that the company sold 31,000 units last year. The sales manager is convinced that a 10% reduction in the selling price, combined with a $80,000 increase in advertising expenditures, would increase annual unit sales by 40%. Prepare two contribution format income statements: one showing the results of last year's operations, and one showing what the results of operations would be if these changes were made. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) eBook Print References References Last Year Proposed Total Per Unit Total Per Unit Sales 6. Refer to the original data. Assume again that the company sold 31,000 units last year. The president feels that it would be unwise to change the selling price. Instead, she wants to increase the sales commission by $3 per unit. She thinks that this move, combined with some increase in advertising, would double annual unit sales. By how much could advertising be increased with profits remaining unchanged? Do not prepare an income statement; use the incremental analysis approach. Increase in advertisement cost 2 Memofax, Inc. produces memory enhancement software for computers. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: 10 points eBook Sales (15,500 units) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating loss $ 310,000 232,500 77,500 88,500 $ (11,000) Print References Required: 1. Compute the company's CM ratio and its break-even point in both units and dollars. (Do not round intermediate calculations. Round your "Break-even point in units" answer up to nearest whole number.) % Contribution margin ratio Break-even point in units Break-even point in dollars 2 Memofax, Inc. produces memory enhancement software for computers. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: 10 points eBook Sales (15,500 units) Less: Variable expenses Contribution margin Less: Fixed expenses Net operating loss $ 310,000 232,500 77,500 88,500 $ (11,000) Print References Required: 1. Compute the company's CM ratio and its break-even point in both units and dollars. (Do not round intermediate calculations. Round your "Break-even point in units" answer up to nearest whole number.) % Contribution margin ratio Break-even point in units Break-even point in dollars

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

The ASQ Auditing Handbook

Authors: J. P. Russell,

4th Edition

0873898478, 978-0873898478

More Books

Students also viewed these Accounting questions

Question

Understand the role of employer branding in talent management.

Answered: 1 week ago