4. ABC Logistics sales are $10 million. The company spends $4 million for direct materials purchases,...
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4. ABC Logistics sales are $10 million. The company spends $4 million for direct materials purchases, $3 million for direct labor purchases. Overhead is $2 million and profit is $1 million. Direct labor and direct materials vary with sales, but overhead (fixed costs) does not. The company wants to double its profit. a. By how much should the firm increase annual sales? b. By how much should the firm decrease material costs? c. By how much should the firm decrease labor costs? 4. ABC Logistics sales are $10 million. The company spends $4 million for direct materials purchases, $3 million for direct labor purchases. Overhead is $2 million and profit is $1 million. Direct labor and direct materials vary with sales, but overhead (fixed costs) does not. The company wants to double its profit. a. By how much should the firm increase annual sales? b. By how much should the firm decrease material costs? c. By how much should the firm decrease labor costs?
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a To double the profit the firm needs to increase annual sales by 100 10 ... View the full answer
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