The purchasing manager for Rockwell Fashion Bags has been able to purchase the material for its signature handbags for $2 less per bag. Keeping everything else the same, what effect would this reduction in material cost have on the break-even point for Rockwell Fashion Bags? Now assume that the sales manager decides to reduce the selling price of each handbag by $2. What would the net effect of both of these changes be on the break-even point in units for Rockwell Fashion Bags?
Answer to relevant QuestionsDescribe three ways that cost-volume-profit concepts could be used by a service organization. Alston Jewellery had sales revenues last year of $2.4 million, while its break-even point (in dollars) was $2.2 million. What was Alston Jewellery’s margin of safety in dollars? What does the term margin of safety mean? ...First Nation Travel uses the contribution margin income statement internally. First Nation’s first-quarter results follow. First Nation’s relevant range is between sales of $100,000 and $700,000. FIRST NATION ...Refer to Vair’s Steel Parts in E7-21A. Vair feels like he is in a giant squeeze play: The auto- motive manufacturers are demanding lower prices, and the steel producers have increased raw material costs. Vair’s ...Grand’s Sporting Goods is a retailer of sporting equipment. Last year, Grand’s sales revenues totalled $6,000,000. Total expenses were $2,100,000. Of this amount, approximately $1,500,000 were variable, while the ...
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