# 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

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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## Accounting concepts and applications

11th Edition

**Authors:** Albrecht Stice, Stice Swain

**ISBN:** 978-0538745482