Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The problem is the first one and where you put the answers in the second one :) Thanks Anderson Metals manufactures and sells #3 steel
The problem is the first one and where you put the answers in the second one :) Thanks
Anderson Metals manufactures and sells #3 steel rebar that is used in the construction fslabs and driveways. The steel bar not only strengthens the finished concrete product, but it also has unique properties such that its temperature related expansion and contraction matches that of concrete. The product is manufactured and sold in 20' long "sticks." The product is generally produced and sold to match customer demand, and there is not a significant amount of finished goods inventory at any point in time. Summary information for 2016 is as follows Sales were $20,000,000, consisting of 5,000,000 sticks Total variable costs were $11,000,000 Total fixed costs were $8,000,000. Net income was $1,000,000 The general economic conditions appear to be deteriorating heading into 2017, and there is some concern about a reduction in sales volume. The following questions should each be answered independent of one another (a)What is the company's break-even point in "sticks?" (b) Can the company sustain a 30% reduction in total volume, and remain profitable? What would be their net income or net loss if volume is reduced by 30%? (c) The company's sole shareholder, Doug Anderson, generally lives off of dividends paid by the business. The business typically declares and pays a dividend equal to $100,000 for Doug's normal living expenses. Doug is demanding a $64,800 increase in dividends for 2017. What total sales volume must Anderson Metals produce in 2017 to accomodate the increase in dividends andmaintain the same net income? If total volume is expected to decrease by 20%, and the company wishes to continue to produce a $1,000,000 net income by raising the per unit selling price, what revised per stick price must be imposed? Will this strategy necessarily work? s a dividend edu dividends for e in (d) (e) If the company expects a drop in raw material prices to reduce total variable costs to $2 per stick, but all other revenue and cost factors to be unaffected, what will be the revised break- even point in sales and units? Volume Unit Total Sales Varaible Costs Contribution Margin Fixed Costs Net IncomeStep 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