breakeven Marathon Co . makes and sells a single product. The current selling price is $ 1
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Question:
breakeven Marathon Co makes and sells a single product. The current selling price is $ per unit. Variable expenses are $ per unit, and fixed expenses total $ per month.
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Required:
Unless otherwise stated, consider each requirement separately.
Calculate the breakeven point expressed in terms of total sales dollars and sales volume.
Calculate the margin of safety and the margin of safety ratio. Assume current sales are $
Calculate the monthly operating income or loss at a sales volume of units per month.
Calculate monthly operating income or loss if a $ per unit reduction in selling price results in a volume increase to units per month.
What questions would have to be answered about the costvolumeprofit analysis simplifying assumptions before adopting the price cut strategy of part d
Calculate the monthly operating income or loss that would result from a $ per unit price increase and a $ per month increase in advertising expenses, both relative to the original data. Assume a sales volume of units per month. Is the increase in advertising expense justified by the price increase?
Management is considering a change in the sales force compensation plan. Currently each of the firms two salespeople is paid a salary of $ per month. Calculate the monthly operating income or loss that would result from changing the compensation plan to a salary of $ per month, plus a commission of $ per unit, assuming a sales volume of
units per month.
units per month.
Assuming that the sales volume of units per month achieved in part g could also be achieved by increasing advertising by $ per month instead of changing the sales force compensation plan, which strategy would you recommend? Explain your answer.
Related Book For
Accounting What the Numbers Mean
ISBN: 978-0073527062
9th Edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
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