Applying Differential Analysis to Alternative Profit Scenarios Epson produces color cartridges for inkjet printers. Suppose cartridges...

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Applying Differential Analysis to Alternative Profit Scenarios Epson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $5.20 each. Total fixed costs per year are $1,881,000. Variable cost per unit are $1.85 for direct materials, $0.10 for direct labor, $0.30 for factory overhead, and $0.05 for distribution. The variable distribution costs are for transportation to mail-order distributors. Also assume the current annual production and sales volume is 990,000 and annual capacity is 1,210,000 units. REQUIRED The company would like to increase profitability in the upcoming year. Estimate the effect of the following separate proposals on annual profits. a. A 15% increase in the unit selling price would likely decrease annual sales by 99,000 units. Note: enter all numbers as positive numbers, do NOT use a negative sign. Net estimated profits would increase by $ 0 X b. A 10% decrease in the unit selling price would likely increase annual sales by 110,000 units. However, the additional production will result in machine updates that will increase fixed costs by $11,000. Note: enter all numbers as positive numbers, do NOT use a negative sign. Net estimated profits would decrease by $ 0 Applying Differential Analysis to Alternative Profit Scenarios Epson produces color cartridges for inkjet printers. Suppose cartridges are sold to mail-order distributors for $5.20 each. Total fixed costs per year are $1,881,000. Variable cost per unit are $1.85 for direct materials, $0.10 for direct labor, $0.30 for factory overhead, and $0.05 for distribution. The variable distribution costs are for transportation to mail-order distributors. Also assume the current annual production and sales volume is 990,000 and annual capacity is 1,210,000 units. REQUIRED The company would like to increase profitability in the upcoming year. Estimate the effect of the following separate proposals on annual profits. a. A 15% increase in the unit selling price would likely decrease annual sales by 99,000 units. Note: enter all numbers as positive numbers, do NOT use a negative sign. Net estimated profits would increase by $ 0 X b. A 10% decrease in the unit selling price would likely increase annual sales by 110,000 units. However, the additional production will result in machine updates that will increase fixed costs by $11,000. Note: enter all numbers as positive numbers, do NOT use a negative sign. Net estimated profits would decrease by $ 0

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a To estimate the effect of a 15 increase in the unit selling price with a likely decrease in annual ... View the full answer