Question
Portal Enterprises is investigating potential impacts of changing its discount policy. The proposed change would increase the sales discount for customers by 5%, but it
Portal Enterprises is investigating potential impacts of changing its discount policy. The proposed change would increase the sales discount for customers by 5%, but it is expected that the company would see an overall increase in net sales of 8%. The variable and fixed costs for the company, obviously, would remain constant. The CEO of the company would like for you to provide an analysis of what the new operating profit would be if this change were to occur. The current information for the company is:
Net sales after discount | $500,000 |
Variable costs | $130,000 |
Contribution Margin | $370,000 |
Fixed Costs | $85,000 |
Operating Profit | $285,000 |
complete the following table, to be able to explain to the CEO what the operating profit would be if the proposed change is implemented:
Net sales after discount |
|
Variable costs |
|
Contribution Margin |
|
Fixed Costs |
|
Operating Profit |
|
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