Sweet Nature Corporation manufactures Sweet 'n Salty trail mix. Last month, the company produced and sold...
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Sweet Nature Corporation manufactures "Sweet 'n Salty" trail mix. Last month, the company produced and sold 800,000 units and sold them at a price of $4 each. Related information appears below: Item Utilities for factory Advertising (based on number of website page views) Costs for product packaging Chocolate pieces and dried fruit Wages for factory cleaning staff Rent of factory and equipment Salaries for office staff Wages for production crew Insurance on the factory Nuts (e.g. peanuts, cashews and almonds) Total Cost $17,000 22,000 125,000 152,800 275,000 350,000 475,000 486,000 18,000 878,950 b. The company uses the cost-plus approach to pricing and wants to achieve an approximate profit of 25 percent. Did it meet its profit objective last month? Briefly explain. Regardless, what two specific actions would you recommend to improve its profitability? C. If the company had only sold 550,000 units last month, what dollar amount would it report for cost of goods sold as well as ending inventory in its financial statements? Round your final answer for each to the nearest dollar. d. Identify all costs as either a variable cost (VC) or a fixed cost (FC) then calculate the variable cost per unit (rounded to the nearest penny) assuming 800,000 units were produced and sold as well as the total fixed costs. What is the break-even point (rounded to the nearest whole unit)? Prepare a CVP income statement to answer each scenario below. The scenarios are independent of each other and unless specified otherwise, use the volume, rounded VC per unit and FC data from part d as well as a price of $4 per unit. e. f. g. For next month, the company is considering whether it should use a higher quality chocolate in its product line. If so, its costs for chocolate would increase by $0.25 per unit. If the change is made, the company anticipates that unit sales will increase by 8 percent. What is the projected net income under this scenario? Instead, the company is also considering upgrading their production equipment to improve the packaging process and prolong the product's shelf life. If so, its costs for rent on equipment would increase by $40,000 and the company anticipates that unit sales will increase by 15,000 units. What is the projected net income under this scenario? Would you recommend either course of action in part e or part f? Briefly explain. Sweet Nature Corporation manufactures "Sweet 'n Salty" trail mix. Last month, the company produced and sold 800,000 units and sold them at a price of $4 each. Related information appears below: Item Utilities for factory Advertising (based on number of website page views) Costs for product packaging Chocolate pieces and dried fruit Wages for factory cleaning staff Rent of factory and equipment Salaries for office staff Wages for production crew Insurance on the factory Nuts (e.g. peanuts, cashews and almonds) Total Cost $17,000 22,000 125,000 152,800 275,000 350,000 475,000 486,000 18,000 878,950 b. The company uses the cost-plus approach to pricing and wants to achieve an approximate profit of 25 percent. Did it meet its profit objective last month? Briefly explain. Regardless, what two specific actions would you recommend to improve its profitability? C. If the company had only sold 550,000 units last month, what dollar amount would it report for cost of goods sold as well as ending inventory in its financial statements? Round your final answer for each to the nearest dollar. d. Identify all costs as either a variable cost (VC) or a fixed cost (FC) then calculate the variable cost per unit (rounded to the nearest penny) assuming 800,000 units were produced and sold as well as the total fixed costs. What is the break-even point (rounded to the nearest whole unit)? Prepare a CVP income statement to answer each scenario below. The scenarios are independent of each other and unless specified otherwise, use the volume, rounded VC per unit and FC data from part d as well as a price of $4 per unit. e. f. g. For next month, the company is considering whether it should use a higher quality chocolate in its product line. If so, its costs for chocolate would increase by $0.25 per unit. If the change is made, the company anticipates that unit sales will increase by 8 percent. What is the projected net income under this scenario? Instead, the company is also considering upgrading their production equipment to improve the packaging process and prolong the product's shelf life. If so, its costs for rent on equipment would increase by $40,000 and the company anticipates that unit sales will increase by 15,000 units. What is the projected net income under this scenario? Would you recommend either course of action in part e or part f? Briefly explain.
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