Final Company manufactures a single product that sells for $45 per unit. Variable production costs are...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Final Company manufactures a single product that sells for $45 per unit. Variable production costs are $13 and variable selling costs are $7 per unit. Annual fixed costs include $263,000 administrative costs, $196,000 manufacturing overhead, and $291,000 selling costs. Required: 1. Refer to the original data. Assume that the company sold 40,000 units last year. Prepare the contribution approach income statement. a. b. Compute the degree of operating leverage. C. If sales drop to 35,000 units next year, what will be the % change in operating income? 2. Refer to the original data. Assume that the company sold 40,000 units last year. The management is thinking of increasing the selling price by $4 and increasing commissions per unit sold by $2 instead of paying $30,000 flat salaries to the sales force. The management is also thinking of using less quality materials and less skilled workers, decreasing production costs per unit by $3, so that a production supervisor paid $75,000 annually must be hired. If the changes are applied, how many units will have to be sold next year to earn the same operating income as last year? Refer to the original data. Assume that the company sold 30,000 units last year. The sales manager wants to decrease the selling price by 20%, use higher quality inputs that will increase production costs by $6 per unit, decrease the sales commissions by $4 per unit sold, and to open a new store which will increase annual rent, insurance and salaries costs by $355,000. She thinks that this move, combined with some increase in advertising, would cause annual sales to triple. By how much could advertising be increased with profits remaining unchanged? Use the incremental analysis approach; do not prepare an income statement. 3. Final Company manufactures a single product that sells for $45 per unit. Variable production costs are $13 and variable selling costs are $7 per unit. Annual fixed costs include $263,000 administrative costs, $196,000 manufacturing overhead, and $291,000 selling costs. Required: 1. Refer to the original data. Assume that the company sold 40,000 units last year. Prepare the contribution approach income statement. a. b. Compute the degree of operating leverage. C. If sales drop to 35,000 units next year, what will be the % change in operating income? 2. Refer to the original data. Assume that the company sold 40,000 units last year. The management is thinking of increasing the selling price by $4 and increasing commissions per unit sold by $2 instead of paying $30,000 flat salaries to the sales force. The management is also thinking of using less quality materials and less skilled workers, decreasing production costs per unit by $3, so that a production supervisor paid $75,000 annually must be hired. If the changes are applied, how many units will have to be sold next year to earn the same operating income as last year? Refer to the original data. Assume that the company sold 30,000 units last year. The sales manager wants to decrease the selling price by 20%, use higher quality inputs that will increase production costs by $6 per unit, decrease the sales commissions by $4 per unit sold, and to open a new store which will increase annual rent, insurance and salaries costs by $355,000. She thinks that this move, combined with some increase in advertising, would cause annual sales to triple. By how much could advertising be increased with profits remaining unchanged? Use the incremental analysis approach; do not prepare an income statement. 3.
Expert Answer:
Answer rating: 100% (QA)
The image contains a question about Final Companys financial data analysis and decisionmaking based on various changes to costs and sales There are three separate questions requiring us to perform cal... View the full answer
Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Refer to the information pertaining to Endless Mountain Company that is provided in Integration Exercise 16 as well as the schedules that you prepared in answering Integration Exercises 16 through...
-
Refer to Exercise 21- 10. In 21-10, Blanchard Company manufactures a single product that sells for $ 180 per unit and whose total variable costs are $ 135 per unit. The companys annual fixed costs...
-
L-keys, such as the one shown in the figure below, are commonly used to insert screws and bolts in medical implants. This insertion process can be simplified into the loading scenario shown in the...
-
What is the Uniform Partnership Act of 1997 and what is its relevance to partnership accounting?
-
The following information is used to calculate Cleaning Capers Ltds payroll for the week ending 30 June 2018. Employee Gross pay Salary sacrifice donations V. Gribben D. Mitchell F. Speight P. Aiken...
-
If \(10 \%\) of your state would be covered with PV collectors, estimate the power produced in \(\mathrm{kWh} /\) day per capita on average. If \(10 \%\) of the people in your state had to drive...
-
Clear View Miniature Golf and Driving Range Inc. was opened on March 1 by Roger Prince. These selected events and transactions occurred during March. Mar. 1 Stockholders invested $50,000 cash in the...
-
Make and prepare adjusting entries for Martin Ltd as at 30 June for the following situations: (a) The Supplies account shows a balance of $1000, but a physical count shows only $400 if supplies. (b)...
-
Suppose 40% of recent college graduates plan on pursuing a graduate degree. Fifteen recent college graduates are randomly selected. a. What is the probability that no more than four of the college...
-
The following table shows the average returns for some of the largest mutual funds commonly found in retirement plans. (Assume end-of-month deposits and withdrawals and monthly compounding, and...
-
1. Use the Geometric Figures Chart to review shapes that you know and to identify shapes that you hope to find on your scavenger hunt. 2. Take a look at your surroundings. Feel free to do this from...
-
commonwealth bank network design 1. Rainbow table attacks are a type of attack that attempts to discover the password from the hash. However, they use rainbow tables, which are huge databases of...
-
Lior Silberman's Math 312: ComPAIR Assignment 2 This assignment is due Wednesday, 3/2/2021 at noon (Vancover time) Comparisons are due Sunday, 5/3/2021 at 11pm (Vancouver time). 1. Let n be a...
-
Draw the open circuit and short circuit characteristics using the data given below for a 150MW, 13KV, 0.85PF, 50Hz Synchronous generator. [CO1] Open circuit characteristic If (A) ...
-
2.) Given the Commons Source Amplifier described below. Determine, AedB-mid, fB-cin-total, fB-cout- total, fB-high and the high frequency Magnitude and Phase portions of the transfer function for Ac....
-
Which one of the following is the best example of two mutually exclusive projects? A. building a retail store that is attached to a wholesale outlet B. producing both plastic forks and spoons on the...
-
(a) Water flows through the nozzle of a garden hose. Find an expression for m in terms of line pressure P 1 , ambient pressure P 2 , inside hose diameter D 1 , and nozzle outlet diameter D 2 . Assume...
-
If a product is generating a loss, then it should be discontinued. Do you agree? Explain.
-
Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is: Direct materials . . . . . . . . . . . . . ....
-
Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: The planning...
-
The static deflection of the spring in the system if Figure SP2.9 is \(m g / k\). Indicate whether the statement presented is true or false. If true, state why. If false, rewrite the statement to...
-
Gravity cancels with the static spring force, and hence, the potential energy of neither is included in potential energy calculations for the system of Figure SP2.15. Indicate whether the statement...
-
What is the small angle assumption and how is it used?
Study smarter with the SolutionInn App