# SMC, Inc., is a producer of handheld electronic games. Its 2012 income statement was as follows: In preparing its budget for 2013, SMC is evaluating the effects of changes in costs, prices, and volume on profit. Required: 1. Evaluate the following independent cases, and determine SMC's 2013 budgeted profit or loss in each case. (Assume that 2012 figures apply unless

Chapter 21, Practice Exercises #52

SMC, Inc., is a producer of handheld electronic games. Its 2012 income statement was as follows: In preparing its budget for 2013, SMC is evaluating the effects of changes in costs, prices, and volume on profit.
Required:
1. Evaluate the following independent cases, and determine SMC's 2013 budgeted profit or loss in each case. (Assume that 2012 figures apply unless stated otherwise.)
a. Fixed costs increase \$150,000.
b. Fixed costs decrease \$100,000.
c. Variable costs increase \$3 per unit.
d. Variable costs decrease \$4 per unit.
e. Sales price increases \$5 per unit.
f. Sales price decreases \$5 per unit.
g. Sales volume increases 25,000 units.
h. Sales volume decreases 15,000 units.
i. Sales price decreases \$4 per unit, sales volume increases 40,000 units, and variable costs decrease by \$2.50 per unit.
j. Fixed costs decrease by \$100,000, and variable costs increase \$4 per unit.
k. Sales volume increases 30,000 units, with a decrease in sales price of \$2 per unit.
Variable costs drop \$1.50 per unit, and fixed costs increase \$50,000.
2. What sales volume in units would be needed to realize \$1,000,000 in profit if SMC reduces its price to\$30?

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