Monterey Co. makes and sells a single product. The current selling price is $13 per unit. Variable expenses are $7.8 per unit, and fixed expenses total $29,340 per month.
Required:
(Unless otherwise stated, consider each requirement separately.)
a. Calculate the break-even point expressed in terms of total sales dollars and sales volume.
b. Calculate the margin of safety and the margin of safety ratio. Assume current sales are $75,000.
c. Calculate the monthly operating income (or loss) at a sales volume of 5,400 units per month.
d. Calculate monthly operating income (or loss) if a $2 per unit reduction in selling price results in a volume increase to 8,400 units per month.
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?
f. 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 5,400 units per month.
g. 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. 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 $0.80 per unit, assuming a sales volume of
1. 5,400 units per month.
2. 6,000 units per month.
h. Assuming that the sales volume of 6,000 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, which strategy would you recommend? Explain your answer.
Answers: 1
Business, 22.06.2019 18:00
Martha entered into a contract with terry, an art dealer. according to the contract, terry was to supply 18 th century artifacts to martha for the play she was directing, and martha was ready to pay $50,000 for this. another director needed the same artifacts and was ready to pay $60,000. terry decided not to sell the artifacts to martha. in this case, the court may order terry to:
Answers: 2
Business, 22.06.2019 20:00
After testing its water, a city water department issues a report to the related citizens, noting what chemicals have been identified, their doses, and the estimated risks of exposure at these levels. this report represents a type of
Answers: 1
Business, 22.06.2019 23:50
Juniper company, inc. uses a perpetual inventory system. the company purchased $9,750 of merchandise on august 7 with terms 1/10, n/30. on august 11, it returned $1,500 worth of merchandise. on august 16, it paid the full amount due. the correct journal entry to record the payment on august 16 is:
Answers: 1
Business, 23.06.2019 04:40
Which qualifications have an importance level higher than 60 for a career as a customer service representative? select all that apply operation monitoring mathematics service orientation reading comprehension persuasion learning strategies speaking
Answers: 1
Monterey Co. makes and sells a single product. The current selling price is $13 per unit. Variable e...
Mathematics, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
Biology, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
English, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
Physics, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00
Mathematics, 10.03.2021 01:00