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The income statement for Martinez Salmon Sales, which produces smoked salmon, follows: Revenue ( 95,300 lbs) $ 762,400 Expenses Fish $ 190,600 Smoking materials 19,060
The income statement for Martinez Salmon Sales, which produces smoked salmon, follows: Revenue ( 95,300 lbs) $ 762,400 Expenses Fish $ 190,600 Smoking materials 19,060 19,060 Packaging materials Labour (wages) Administration 324,020 133,420 Sales commissions 9,530 Total expenses 695,690 Pretax income $ 66,710 Assume that the administrative costs are fixed and that all the other costs are variable. Suppose the provincial government curtails fishing because of low fish counts. As a result, Martinez Salmon Sales can buy only 47,650 lbs of salmon this year. Assume that the selling price, the fixed costs, and the variable costs remain the same as last year. Using only quantitative information, should Martinez Salmon operate this year? Explain your answer, using calculations. (Hint: Before you begin, identify the type of non-routine operating decision, the decision options, and the relevant information for this decision.) (Round answer to 2 decimal places, e.g. 5.35.) Contribution margin: $ per lb salmon If the fixed costs can be avoided by not producing, the company produce this year. If the fixed costs can not be avoided by not producing, the company produce this year. e Textbook and Media Assume that Martinez Salmon can buy up to 67,760 lbs of fish at $ 2.00/lbs and that the remainder of the fixed and variable costs remain the same as last year. Also assume that the selling price remains the same as last year and that the market will purchase at least another 30,110 lbs of fish. If the managers of Martinez Salmon wish to sell more salmon, what should they be willing to pay to purchase more fish? (Hint: This type of decision is different from the one in the previous part. Before you begin, identify the type of non-routine decision, the decision options, and the relevant information for this decision.) (Round answer to 2 decimal places, eg. 5.35.) Willing to pay: $ per lb salmon
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