Derby Phones is considering the introduction of a new model of headphones with the following price...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price Variable costs Fixed costs $ 25 per unit 5 per unit 27,000 per month Assume that the projected number of units sold for the month is 6,500. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? d. Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price Variable costs Fixed costs $ 25 per unit 5 per unit 27,000 per month Assume that the projected number of units sold for the month is 6,500. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by 10 percent? Increases by 20 percent? c. What is the impact on operating profit if variable costs per unit decrease by 10 percent? Increase by 20 percent? d. Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much?
Expert Answer:
Answer rating: 100% (QA)
a Lets calculate the operating profit step by step Calculate the total revenue Total revenue Sales price per unit Number of units sold Total revenue 25 6500 units Calculate the total variable costs To... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
Students also viewed these accounting questions
-
Ex5a. You are investing in a project that is expected to pay $20,000 in one year and $20,000 two years from now. want to earn a 6% annual rate of interest or return. you be willing to invest in the...
-
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics: Sales price $ 285 per unit Variable costs 145 per unit Fixed costs 406,000...
-
Derby Phones is considering the introduction of a new model of headphones with the following price and cost characteristics. Sales price$17per unit Variable costs 5per unit Fixed costs 29,000per...
-
What are the four different elements of advertising? Are all of them appropriate to an average retailer in most markets?
-
Julio Sanchez manages the cutting department of Guzman Timber Company. He purchased a tree-cutting machine on January 1, 2011, for $400,000. The machine had an estimated useful life of five years and...
-
Modified quotas are given in Problems 7-14. Round your answers to two decimal places. a. Find the lower and upper quotas. b. Find the arithmetic mean of the lower and upper quotas. c. Find the...
-
One critical-thinking skill is a heightened awareness of the danger of reaching a conclusion prior to acquiring missing information that were it known would have a reasonable probability of altering...
-
Cost allocation and decision making. Greenbold Manufacturing has four divisions named after its locations: Arizona, Colorado, Delaware, and Florida. Corporate headquarters is in Minnesota. Greenbold...
-
1) (4 marks) Given the function f(x) = x a. Determine the average rate of change on the interval -5 x 2. b. Is it possible to determine the instantaneous rate of change at x = 2? Explain why or why...
-
In a physics lab experiment, a compressed spring launches a 20 g metal ball at a 30 angle. Compressing the spring 20 cm causes the ball to hit the floor 1.5 m below the point at which it leaves the...
-
Question 25 2 pts On June 30 of the current year, the assets and liabilities of the company are as follows: Cash $20,500; Accounts Receivable, $7,250; Supplies, 650; Equipment, P12,000; Accounts...
-
Downsizing at the company, including layoffs Loss of an important client A decrease or elimination of a job benefit (education, parking, travel) An unfavorable regulation, fine for poor results on an...
-
Tell us about a political mistake you made. Your interpersonal relationships were affected, right? How can you be more politically conscious while while avoiding political mistakes? What impact does...
-
3. Convert 00111100112 from binary to decimal using the following table: 27 26 25 24 2 2 28 00111100112= 10 2 2 2
-
A company that failed to listen to their customers and so had to fold up. State how the communication was missing between the company and the customers as a result of which company could not survive....
-
A huge Costco pizza is cut into 12 slices and you eat one of them. The single slice's area is 27? inches. What is the radius of the pizza?
-
1. Which of the following statements will explain why the surface tension of CHBr3 is greater than CHCl 3 ? A. CHBr 3 has a higher molar mass, more polarizable thus stronger dispersion forces. B....
-
How much more interest will be earned if $5000 is invested for 6 years at 7% compounded continuously, instead of at 7% compounded quarterly?
-
Yarmouth Company produces a liquid solvent in two departments: Mixing and Finishing. Accounting records at Yarmouth show the following information for Finishing operations for February (no new...
-
The following data are available for Remington Advisors for the month just ended: Gross margin.................................... $ 810,000 Operating profit................................. 305,000...
-
Kinnear Plastics manufactures various components for the aircraft and marine industry. Kinnear buys plastic from two vendors: TappanCorporation and Hill Enterprises. Kinnear chooses the vendor based...
-
A leading financial publication reported that the average baby boomer credit user will pay approximately $1,200 in interest annually. If, instead of paying interest, this amount was saved every year,...
-
With the availability of free credit reports, consumers are encouraged to check their report every 4 months-one report from each of the three major bureaus. In the past, consumers also were...
-
Working in a small group, collect credit card marketing information or the summary of account information sent to cardholders for three to five different cards. Be sure to protect the identity of the...
Study smarter with the SolutionInn App