Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months
The Central Valley Company is a manufacturing firm that produces and sells a single product. The company's revenues and expenses for the last four months are given below Central Valley Company Comparative Income Statement ril 5,000 March ay June 7,000 $726,000 $660,000 $792,000 $924,000 384,250 356,400 411,840 471,240 5,500 6,000 Sales in units Sales revenue Less: Cost of goods sold $341,750 $303,600 $380,160 $452,760 Gross margin Less: Operating Expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense $ 62,500 $ 55,000 $ 66,000 68,500 77,500 178,000 11,500 44,500 77,500 162,300 11,500 44,500 77,500 140,500 11,500 44,500 77,500 164,000 11,500 44,500 Total operating expenses $358,300 $329,000 $363,500 $380,000 Net income S (16,550) $(25,400) $16,660 $ 72,760 Required 1. Management is concerned about the losses experienced during the spring and would like to know more about the cost behaviour. Develop a cost equation for each of the costs. (Do not round intermediate calculations. Round "Per Unit" answers to 2 decimal places.) Cost of goods sold Shipping Salaries & commission- per unit per unit per unit 2. Assume that fixed costs are incurred uniformly throughout the year. Compute the annual break-even sales, and the profit if 71,000 units are sold during the year. (Round "Break-even sales" answer to earest whole number.) Break-even sales units Annual profit (71,000 units) 3. Calculate the change in profit if the selling price were reduced by $6.5 each and annual sales were to increase by 6,000 units. 4. Determine the change in profit if the company were to increase advertising by $105,000 and if this were to increase sales by 6,000 units
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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