Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Product Pricing: Single Product Presented is the 2017 contribution income statement of Grafton Products. GRAFTON PRODUCTS Contribution Income Statement For Year Ended December 31, 2017
Product Pricing: Single Product Presented is the 2017 contribution income statement of Grafton Products. GRAFTON PRODUCTS Contribution Income Statement For Year Ended December 31, 2017 Sales (13,000 units) $ 2,925,000 Less variable costs Cost of goods sold $ 780,000 Selling and administrative 208,000 (988,000) Contribution margin 1,937,000 Less fixed costs Manufacturing overhead 780,000 Selling and administrative 315,000 (1,095,000) Net income $ 842,000 During the coming year, Grafton expects an increase in variable manufacturing costs of $12 per unit and in fixed manufacturing costs of $39,000. (a) If sales for 2018 remain at 13,000 units, what price should Grafton charge to obtain the same profit as last year? Round to the nearest cent. $ 240 (b) Management believes that sales can be increased to 16,000 units if the selling price is lowered to $200. What would be the excepted profit (or loss) as a result of this action? Use negative sign with your answer, if appropriate. 889,000 X (C) After considering the expected increases in costs, what sales volume is needed to earn a profit of $254,800 with a unit selling price of $200? Round to the nearest unit. 12,400
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started