Required information Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7, 12-8, 12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $19 per unit. Variable expenses are $11.4 per unit, and fixed expenses total $57,620 per month. (Unless otherwise stated, consider each requirement separately.) Problem 12-25 (Algo) Part c E. Calculate the monthly operating income (or loss) at a sales volume of 7,450 units per month. Note: Do not round intermediate calculations. Required information Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7, 12-8, 12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $19 per unit. Variable expenses are $11.4 per unit, and fixed expenses total $57,620 per month. (Unless otherwise stated, consider each requirement separately.) Problem 12-25 (Algo) Part d d. Calculate monthly operating income (or loss) if a $2 per unit reduction in selling price results in a volume increase to 8,350 units per month. Note: Do not round intermediate calculations. Required information Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7, 12-8, 12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $19 per unit. Variable expenses are $11.4 per unit, and fixed expenses total $57,620 per month. (Unless otherwise stated, consider each requirement separately.) Problem 12-25 (Algo) Part e e. What questions would have to be answered about the cost-volume-profit analysis simplifying assumptions before adopting the price cut strategy of part d ? Note: Select all that apply. Check All That Apply Does the increase in volume move fixed expenses into a new relevant range? Does the increase in volume move variable expenses into a new relevant range? Are variable expenses really linear? Are fixed expenses really linear? Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7, 12-8, 12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $19 per unit. Variable expenses are $11.4 per unit, and fixed expenses total $57,620 per month. (Unless otherwise stated, consider each requirement separately.) Problem 12-25 (Algo) Part f f. 1. Calculate the monthly operating income (or loss) that would result from a $1 per unit price increase and a $6,000 per month increase in advertising expenses, both relative to the original data. Assume a sales volume of 7,450 units per month. 2. Is the increase in advertising expense justified by the price increase? Complete this question by entering your answers in the tabs below. Calculate the monthly operating income (or loss) that would result from a $1 per unit price increase and a $6,000 per month increase in advertising expenses, both relative to the original data. Assume a sales volume of 7,450 units per month. Note: Do not round intermediate calculations. Required information Problem 12-25 (Algo) CVP analysis-what-if questions; breakeven LO 12-7, 12-8, 12-9, 12-10 [The following information applies to the questions displayed below.] Marathon Company makes and sells a single product. The current selling price is $19 per unit. Variable expenses are $11.4 per unit, and fixed expenses total $57,620 per month. (Unless otherwise stated, consider each requirement separately.) Problem 12-25 (Algo) Part g \& h Management is considering a change in the sales force compensation plan. Currently each of the firm's two salespeople is paid a salary of $2,500 per month. g. 1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.8 per unit, assuming a sales volume of 7,450 units per month. 2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.8 per unit, assuming a sales volume of 7,100 units per month. h. 1. Assuming that the sales volume of 7,100 units per month achieved in part g could also be achieved by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss? 2. Which strategy would you recommend? Complete this question by entering your answers in the tabs below. g-1. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.8 per unit, assuming a sales volume of 7,450 units per month. Note: Do not round intermediate calculations. g-2. Calculate the monthly operating income (or loss) that would result from changing the compensation plan to a salary of $400 per month, plus a commission of $0.8 per unit, assuming a sales volume of 7,100 units per month. Note: Do not round intermediate calculations. Losses should be indicated by a minus sign. h-1. Assuming that the sales volume of 7,100 units per month achieved in part g could also be achieved by increasing advertising by $1,000 per month instead of changing the sales force compensation plan. What would be the operating income or loss? Note: Do not round intermediate calculations. Losses should be indicated by a minus sign
