10) The following information has been provided by Arawak Farms Limited for the month of August. Sales ( 10,000 Units ) $ 600,000 $ 420,000 Variable Costs Contribution Margin Fixed Costs $ 180,000 $ 110,000 Net Income $ 70,000 Management is considering the following courses of action to increase Net Income: 1) Increase selling price by 5% with no change in variable costs. 2) Reduce variable costs to 66% of sales. 3) Reduce Fixed Costs by $ 10,000. Required: a) Advise management on the best course of action to maximize the net income. 15 Marks

10) The following information has been provided by Arawak Farms Limited for the month of August. Sales ( 10,000 Units ) $ 600,000 $ 420,000 Variable Costs Contribution Margin Fixed Costs $ 180,000 $ 110,000 Net Income $ 70,000 Management is considering the following courses of action to increase Net Income: 1) Increase selling price by 5% with no change in variable costs. 2) Reduce variable costs to 66% of sales. 3) Reduce Fixed Costs by $ 10,000. Required: a) Advise management on the best course of action to maximize the net income. 15 Marks

Name: 10) The following information has been provided by Arawak Farms Limit
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: 10) The following information has been provided by Arawak Farms Limited for the month ofAugust.Sales ( 10,000 Units )$ 600,000$ 420,000Variable CostsContribution Margin$ 180,000$ 110,000Fixed CostsNet Income$ 70,000Management is considering the foll

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The following monthly data are available for the Charger Company and its only product, Product AJ: Sales (500 units) Variable expenses Contribution margin Fixed expenses Net income Total $137,500 55,000 $ 82,500 52,800 $ 29,700 Per Unit $ 275 110 $ 165 Required: a) Without resorting to calculations, what is the total contribution margin at the break-even point? essibility: Good to go b) Management is contemplating the use of plastic gearing rather than metal gearing in Product SW. This change would reduce variable costs by $15. The company's marketing manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 450 units per month. Should this change be made? c) Assume that Challenger Company is currently selling 500 units of Product SW per month. Management wants to increase sales and feels that this can be done by cutting the selling price by $25 per unit and increasing the advertising budget by $25,000 per…
1. Mower Corporation produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling Price $120 100% Variable Expenses $48 40% Contribution Margin $72 60% Fixed expenses are $567,000 per month. The company is currently selling 9,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $11 per unit. In exchange, the sales staff would accept a decrease in their salaries of $84,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 600 units. What should be the overall effect on the company's monthly net operating income of this change? A. Decrease of $146,400 B. Increase of $21,600 C. Increase of $77,400 D. Increase of $669,600
1) Ehrlich Enterprises prepared the following contribution format income statement based on a sales volume of 3,000 units (the relevant range of production is 1,000 units to 5,000 units): Contribution Margin Income Statement Sales $ 48,000 Variable expenses 30,000 Contribution margin 18,000 Fixed expenses 10,000 Net operating Income $ 8,000 If sales decline to 1,300 units, what would be the net operating income (loss)? If the selling price increases by $3 per unit and the sales volume decreases by 100 units, what would be the net operating income? What is the break-even point in unit sales? What is the break-even point in dollar sales?
19) Alpha has a plant capacity of 200,000 units per month. Unit costs at capacity are: Direct materials $4.00 6.00 3.00 Direct labor Variable overhead Fixed overhead Marketing fixed 1.00 7.00 Marketing/distribution-variable 3.60 Current monthly sales are 190,000 units at $30.00 each. Q, Inc., has contacted Alpha about purchasing 2,000 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is Alpha's change in operating profits if the one-time-only special order is accepted?
Data concerning Wislocki Corporation's single product appear below: Selling price Variable expenses Contribution margin Per Unit Percent of Change in net operating income 25% Fixed expenses are $1,051,000 per month. The company is currently selling 9,700 units per month. Required: The marketing manager would like to introduce sales commissions as an Incentive for the sales staff. The marketing manager has proposed a commission of $11 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $103,000 per month. The marketing manager predicts that Introducing this sales Incentive would Increase monthly sales by 470 units. What should be the overall effect on the company's monthly net operating Income of this change?
Can Please Help Me: Accounting 60 minutes only the given time. Wish you could help me. I will give UPVOTE and GOOD FEEDBACK.
Markham Farms reports the following contribution margin income statement for the month of August. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $2 but will increase fixed costs by 10%. MARKHAM FARMS Contribution Margin Income Statement Sales (1,500 Units @ $70 per unit) $105,000 Variable Costs (1,500 Units @ $15 per Unit) 22,500 Contribution Margin $82,500 Fixed Cost 40,000 Net Income (Loss) $42,500 Prepare a projected contribution margin income statement for Markham Farm assuming it purchases the new equipment. Assume sales level remains unchanged. blankMARKHAM FARMSContribution Margin Income Statement $Sales Variable Costs $Contribution Margin Fixed Cost $Net Income (Loss)
i need the answer quickly
please help me, thank you
Ur
Mukh
Denger