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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 March April 5,800 5,300 $742,400 $678.400 392,200 366,336 Sales in units Sales revenue Less: Cost of goods sold May 6,450 $825.600 4 29,312 June 7,600 $972.800 496,128 $350,200 $312,064 $396,288 $476,672 Gross margin Less: Operating Expenses Shipping expense Advertising expense Salaries and commissions Insurance expense Amortization expense $ 63,100 82.000 163,200 13,000 46.000 $ 54,400 82,000 139,000 13,000 46.000 $ 66,600 82,000 165,500 13,000 46000 $ 67,000 82.000 176,500 13,000 46,000 Total operating expenses $367,300 $(17,100) $334,400 $ (22,336) $373,100 $ 23,188 $384,500 $ 92,172 Net income 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 74,000 units are sold during the year. (Round "Break-even sales" answer to nearest whole number.) units Break-even sales Annual profit (74,000 units) 3. Calculate the change in profit if the selling price were reduced by $8.0 each and annual sales were to increase by 6,600 units. 4. Determine the change in profit if the company were to increase advertising by $108,000 and if this were to increase sales by 6.600 units
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