Question: Tracy, Inc., estimates that next years results will be: Sales revenue (75,000 units) . . . . . . . . . . . .

Tracy, Inc., estimates that next year’s results will be:

Sales revenue (75,000 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 900,000

Less variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (375,000)

Less fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (300,000)

Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 225,000

Recompute profit, assuming each of the following independent conditions:

1. A 9% increase in the contribution margin

2. An 8% increase in the sales volume

3. A 4% decrease in the sales volume

4. A 6% increase in variable costs per unit

5. A 5% decrease in fixed costs

6. A 5% increase in fixed costs

7. A 12% increase in the sales volume and a 6% increase in fixed costs


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