The following are the basic data for the income and costs of Father Company, which produces...
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The following are the basic data for the income and costs of Father Company, which produces CR7 product: units 400 Number of units sold 25 S selling price variable costs Fixed costs $15 ($ included- cost of sales men salaries 600) $ 3500 Required: 1.Calculate the breakeven point in units and in dollars. 2.If the sales department increases the annual advertising budget by $1000, which will increase sales by 120 units, would you recommend increasing the advertising budget? 3.If the company improves the quality of the product by increasing the variable costs by one dollar, this will increase sales to 480 units, while the fixed costs remain unchanged. would you recommend the company improving product quality? 4.If the company reduces the selling price by $2 and increases advertising expenses to 1500 $. Which will increase sales to 600 units, would you recommend Father Company to make these adjustments? 5.Assuming the company produces and sells 400 units. The company wants to change the salesmen salaries from the fixed salary to a variable commission based on $ 1.5 per unit sold. The sales manager believes that this procedure, will increase sales by 15%. would you agree to make the adjustments? The following are the basic data for the income and costs of Father Company, which produces CR7 product: units 400 Number of units sold 25 S selling price variable costs Fixed costs $15 ($ included- cost of sales men salaries 600) $ 3500 Required: 1.Calculate the breakeven point in units and in dollars. 2.If the sales department increases the annual advertising budget by $1000, which will increase sales by 120 units, would you recommend increasing the advertising budget? 3.If the company improves the quality of the product by increasing the variable costs by one dollar, this will increase sales to 480 units, while the fixed costs remain unchanged. would you recommend the company improving product quality? 4.If the company reduces the selling price by $2 and increases advertising expenses to 1500 $. Which will increase sales to 600 units, would you recommend Father Company to make these adjustments? 5.Assuming the company produces and sells 400 units. The company wants to change the salesmen salaries from the fixed salary to a variable commission based on $ 1.5 per unit sold. The sales manager believes that this procedure, will increase sales by 15%. would you agree to make the adjustments?
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Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0077733773
7th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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